New Delhi (NVI): United States Agency for international development (USAID) and US international development finance corporation (DFC) will sponsor a USD 41 million loan agreement to help finance investments in renewable energy solutions by Indian 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,” according to an official statement.
SMEs account for 48 percent of the total energy consumed in India’s industrial sector. These loans will enable Small and Medium Enterprises to access reliable power and cut costs.
Furthermore, lower monthly energy costs will drive important social benefits, including job creation and economic growth, while reducing carbon emissions and improving air quality.
During the signing of the agreement, USAID India’s Acting Mission Director Karen Klimowski stated, “USAID/India is pleased to promote power diversification and support local businesses in India. 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 obstacles in securing the financing needed to install and use rooftop panels, the statement added.
To address this challenge, 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).
“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 $9 billion market opportunity—for SMEs,” the statement read.
Once these credit guarantees lower the financial hurdle for installing rooftop solar, India will realize numerous benefits resulting from the transition to this green technology. These guarantees have the potential to unlock lifesaving social benefits and robust economic growth.
USAID will continue its support by providing technical assistance to address quality and safety concerns in the rooftop solar market, it added.