The United States Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) has announced a $41 million loan guarantee program to finance investment in renewable energy solutions by Indian small and medium enterprises (SMEs).
"USAID and DFC are jointly sponsoring a $41 million loan portfolio guarantee to help finance investments by Indian small and medium enterprises (SMEs) in renewable energy solutions, including rooftop solar installations. These loans will enable SMEs to access reliable power and cut costs," a declaration said.
USAID/India's Acting Mission Director Karen Klimowski stated, Investments in solar solutions, secured by these credit guarantees, will improve access to clean, steady, and affordable energy as well as further progress towards India's clean energy transition and climate change mitigation.
India's commercial and industrial sectors pay high fees for their electricity, making rooftop solar a sustainable, cost-saving investment, but SMEs and residential consumers face hindrances in securing the financing needed to install and use rooftop panels, as per the statement.
SMEs account for 48 percent of the total energy consumed in India's industrial sector.
Rooftop solar power generation offers a win-win, it said, adding that lower monthly energy costs drive important social benefits, including job creation and economic growth, while reducing carbon emissions and improving air quality.
USAID and DFC partnered with the New York-based Encourage Capital, an environmentally focused investment firm, and two Indian non-banking financial companies, cKers Financial and woman-owned Electronica Finance Limited (EFL), to address this challenge.
Encourage Capital has invested $15 million in EFL, which will use the USAID-DFC loan portfolio guarantee to stimulate the rooftop solar market - representing a USD 9 billion market opportunity - for SMEs.
USAID will continue its support by providing technical assistance to address quality and safety concerns in the rooftop solar market. Once these credit guarantees lower the financial hurdle for installing rooftop solar, India will realize numerous benefits ensuing from the transition to this green technology.
These guarantees have the potential to unlock lifesaving social benefits and robust economic growth.