Since 2003, the $1.5 million program has helped 16,600 Indians living in the southern state of Karnataka buy solar power systems for their homes and small businesses.
Jyoti Painuly, senior energy planner for the UN Environment Program (UNEP), lists examples of people who have profited from the scheme: “There is the food vendor who told us ’Now my food doesn’t smell of kerosene, so I sell more of it,’ and the tailor who said that he can work a few extra hours during the day, bringing in more money.“
The project began by selecting five vendors of household solar panel systems in Karnataka. With funding from the UN Foundation and the Shell Foundation, UNEP helped train the vendors, who were having limited success selling their wares in
Power Cuts
In parallel, UNEP went to two local banks and discussed ways to make it easier for rural people to afford solar systems. They then matched up the banks and the vendors so that people seeking to buy solar systems at any of the five vendors would be directed to the two banks which could help them make the purchase affordable.
“In 2003, close to 70% of people in
Household solar systems work by storing up energy in a battery which is then connected, for example, to a few light bulbs, a small radio or a small black-and-white television. But the system costs between $300 and $500, making them prohibitive for many of
“The banks decided that we should subsidize lower interest rates for loans to buy solar systems,“ says Painuly.
Demand Created
Before the UNEP project, banks loaned money for people to buy these systems at an interest rate of 12%. Through the project, the two participating banks dropped that rate down to 5% and UNEP paid the difference. UNEP also convinced the banks to extend the loans from three to five years and accept lower down-payments.
The result was that buying household solar systems became more affordable. And within a couple years other banks realized that UNEP’s village talks about the usefulness of solar systems had created a demand for them and began to offer similar low-interest rate loans.
“The potential for using innovative financial mechanisms to accelerate the uptake of these technologies in markets is absolutely enormous,“ Friends of the Earth executive director Tony Juniper told New Scientist. “But in the end it won’t go far enough or fast enough without the active involvement of governments.“
Painuly notes that the government of
UNEP’s involvement ends in May 2007, but Painuly is convinced that a market has now been created that will not disappear with the project’s end.
“Two vendors have told us that they are now selling 70% of their solar systems in cooperation with banks outside the program,“ he told New Scientist.
Similar projects are now being initiated by UNEP in
PIN/ NEWSCIENTIST.COM
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