LINKING SOLAR ENERGY & MICROFINANCE

Many potential customers without access to electricity have trouble mobilizing sufficient capital to buy solar products. Microfinance loans for solar products can increase sales and allow solar enterprises to reach clients with low or irregular incomes.

At present, roughly 1.6 billion people do not have access to electricity and over 2.5 billion people do not have access to clean cooking options. Most of the people without modern energy access also lack access to financing that would enable them to purchase cleaner energy services. People on low incomes in developing countries typically spend a large proportion of their income on energy. For many rural customers, buying and installing a solar home system typically costs at least INR 4000 to 13000 (depending on the system size and where it is in the world), but can provide light and electricity for many years with minimal ongoing costs aside from routine maintenance and occasional battery replacement. However, experience has shown that most potential customers without access to electricity have trouble mobilizing sufficient capital to make a lump-sum cash payment for solar products. As such, it is often easier for solar enterprises to serve higher income people who can purchase products on a cash basis rather than find ways to target lower income people.