Increasing electricity cost by traditional methods is already a pain point faced by multiple SMEs in India and many are pushing towards adopting solar rooftop plants. Though government has multiple financing schemes announced, yet SMEs lack clear and transparent access to finance or loans for Solar Rooftop plants.
Last week, the United States Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) announced a sum of $41 Million for financing Indian small and medium enterprises (SMEs) willing to adopt solar rooftop plants.
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. - USAID/India’s Acting Mission Director Karen Klimowski
Tariff for Commercial and Industrial institutions is quite high increasing the operating profit of these companies. Adopting solar makes a cost effective and easy investment to immediately curb this expense. Large industries have multiple sources who can finance them, but for SME and residential customers there is no clear path and face multiple obstacles in securing finances. SMEs account for 48% of the total energy consumed in India’s industrial sector.
The USAID and DFC has partnered with the New York-based Encourage Capital (an environment-focused investment firm) and two Indian non-banking financial companies, cKers Financial and woman-owned Electronica Finance Limited (EFL), to address this challenge.
EFL will use a sum of $15 million invested in it by Encourage Capital along with the USAID-DFC loan portfolio guarantee to stimulate the $9 billion rooftop solar market for SMEs.
In June last year, the DFC had approved $1 billion (₹75 billion) to enhance sustainable development processes in Africa, Latin America, the Indo-Pacific, and other emerging markets, including India.