New Loans Finance Solar Power Development in India

NAIROBI, Kenya, March 4, 2003 (ENS) - The United Nations Environment Programme (UNEP) today launched a major new $7.6 million initiative with two of India's largest banking groups to offer 18,000 southern Indian households low cost financing for solar generated electricity.

"This initiative helps to meet both environmental and development objectives by overcoming a major barrier to increasing the use of renewable energy access to finance, UNEP Executive Director Klaus Toepfer said.

In the southern Indian state of Karnataka, Syndicate Bank and Canara Bank are offering new loans in which UNEP is "buying down" financing costs of photovoltaic solar home systems.

Indian households will be able to purchase systems at an interest rate of approximately five percent, compared to the normal consumer lending rates of 11 to 12 percent. The loans are accesible to customers of established solar rural electrification companies.

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Solar panel is installed on another village roof. (Photo courtesy Selco/NREL)
The new program will be accomplished by combining the two banks and a number of UNEP qualified solar home system vendors and is made possible with support from the UN Foundation and the Shell Foundation.

UN Foundation president Tim Wirth called the program a "market-driven approach designed to stimulate competition among vendors and ensure quality products, competitive pricing and reliable after sales service."

Seven in every 10 rural households are still without access to electricity in India. Many households rely on inefficient and polluting energy sources such as kerosene, which produces negative health, environmental and social impacts. In Karnataka, even where grid electricity is available, there are capacity shortages and the quality of the electricity delivered is inconsistent.

Despite high initial costs, UNEP said solar home systems emerge as an attractive option in the context of costly or unreliable alternatives and escalating grid power tariffs, and so a growing number of households are turning to solar as a matter of necessity and convenience.

The new UNEP program is not the first experience India's remote villages have had with solar power. About 2,500 villages and hamlets have been electrified through solar photovoltaic systems and power plants, a government official said in June 2002. At the time, photovoltaic projects were being put in place to electrify hundreds of villages in Chhatisgarh, Kerala, Jammu and Kashmir, Tripura, Uttarchanchal, Uttar Pradesh and West Bengal.

On October 2, 2000, Greenstar India launched what they called the first "digital culture and electronic commerce village" at Parvatapur in Khilaghanapur to commemorate the birthday of Mahatma Gandhi. Located about 150 kilometers from the Andhra Pradesh capital of Hyderabad in southern India, Parvatapur became the first village in the country to get Internet connectivity along with equipment to generate solar energy.

Greenstar India announced that it would build 50 solar powered community and e-commerce centers in remote villages throughout India by the end of 2003.

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The Ramakrishna Mission photovoltaic solar project for rural electrification installs solar panels at the tiger preserve guest house. (Photo by Jim Welch/Remote Power courtesy NREL)
Solar power was first used in India on a large scale in 1986 to energize the 80,000 square foot Barefoot College campus at Tilonia, Rajasthan. The campus now is self-sufficient with a 40 kilowatt solar energy unit that meets all its energy needs.

The college trains rural unemployed youth and rural women as barefoot solar engineers. These barefoot solar engineers from different part of the country have installed solar home lighting systems in their villages. They also fabricate and produce solar lanterns.

Funded by the United Nations Development Programme, the college is working in seven village clusters in six states of India. Solar engineers have placed solar power in 300 adult education centers and 800 schools across the country.

Tata BP Solar, a joint solar powered equipment venture between India's Tata group and U.S. based BP Solar, said January 20 that it intends to triple its export revenues in two years. The company manufactures solar cells, modules, batteries, inverters, battery chargers, and solar collectors.