In the past, many microfinance institutions stayed out of solar. The risk was too high, and access to remote areas for both installation and follow-up service was difficult. While the latter is still an issue, the former has become less so. As the cost of solar comes down and technologies for both solar and payment options continue to improve, the perceived risk is lessening.
Partnerships between microfinance institutions and solar companies are working beautifully in many areas, allowing the solar companies to have access to more of their working capital, focusing on what they do best and allowing them to expand faster. Meanwhile, MFIs benefit by gaining access to new clients they can also market other loan products to.
The most rural areas are most in need of the technology and actually often a safe bet. In many cases they are paying more for kerosene or other liquid fuels than they would for solar, not to mention the health and ecological benefits. Even where utility grid power is available, it is often unreliable and expensive. Utilizing systems already in place with Pay as You Go companies makes it easier and more likely for borrowers to repay in smaller, more frequent increments. Others are utilizing carbon credits to help finance these projects.
MFIs are also getting involved in bringing solar to rural areas by financing small solar businesses that sell and install solar systems and cook stoves in remote areas. Grameen and others have trained many women from rural areas in both sales and troubleshooting as a way to spread the technology as well as generate income. Thorough support and information is available to MFIs and other partners through the Renewable Energy Microfinance and Microenterprise Program.
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