The recent decision of the Reserve Bank of India to include loans given by banks to individuals for purchasing off-grid solar products will be a major growth driver for the solar industry, says Sarah Butler-Sloss, Founder-Director of Ashden. Ashden is a London-based not-for-profit organisation that seeks to promote universal access to sustainable energy.

Sarah Butler-Sloss, a philanthropist and an internationally recognised authority in the field of green energy, was in India to take part in the International Seminar on Energy Access that was held in New Delhi a few days back.

In July the RBI included “loans sanctioned by banks directly to individuals for setting up off-grid solar and other off-grid renewable energy solutions for households” under ‘priority sector’ loans.

Sarah feels that the solar power movement in India has taken root and is growing. Falling solar prices and rising diesel costs are contributing to this, making it ever more attractive for people and businesses to invest in solar rather than diesel generators.

She said that India is home to a number of good examples of innovative, end-user finance models that enable people to buy individual solar home systems. For instance, Aryavrat Grameen Bank, a Regional Rural Bank sponsored by Bank of India, explained to rural folk how they could save money by switching over to solar from kerosene lamps. The bank, which won the Ashden award in 2008, has provided finance for 52,000 solar home systems in Uttar Pradesh.

Similarly, Sri Kshetra Dharmasthala Rural Development Project, a microfinance provider has funded over 20,000 homes to buy solar home systems, bio-gas plants and family-scale hydro plants.

On village level ‘mini-grid’ systems, she observed that it was the entrepreneur who needed funding rather than the end user. “This type of start-up funding is much too scarce. Banks and investors need to be aware of the rapidly decreasing price of solar PV and be given the confidence to lend to and invest in solar-powered mini grids based on current, rather than historic, prices, she said.

In India it would make a big difference if the Small Industrial Development Bank of India (SIDBI) would provide priority status to renewable entrepreneurs, she said.

For example, AG Bank has provided the finance for 52,000 Solar Home Systems in Uttar Pradesh; Selco has provided 135,000 Solar Home Systems in Bangalore and other areas; and Husk Power has brought electricity to 200,000 people in Bihar.

“What’s really interesting about India is that in the 12 years since the Ashden Awards were established we have seen more exciting and innovative business models delivering sustainable energy coming out of India than anywhere else in the world,” Sarah said.

ramesh.m@thehindu.co.in

(This article was published on October 13, 2012)
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