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Case study

Microfinance for solar home systems in Bangladesh

Language
English
Countries and regions
Bangladesh
Action area

Mitigation

Case summary

"The Bangladesh solar home systems program, pioneered by nongovernmental organizations such as Grameen Shakti and supported by the government’s Infrastructure Development Company Ltd., has developed a dealer network providing a marketing, microcredit, and after sales service to enable rural households to buy renewable energy systems for lighting and mobile phone charging

The program has succeeded in achieving rapidly growing penetration rates even though those participating in the program pay almost the full cost of their solar home systems using a micro-credit loan facility and are charged high interest rates.

Up to January 2013 over 1 million systems have been installed under the program. Partner organisations report an average loan collection rate of 96% and are servicing their debt to the Infrastructure Development Company Limited (IDCOL). The systems have enabled improvements in rural economy, such as allowing snack shops to stay open late and allowing telephone facility booths to cater to more customers, therefore increasing income.

Except for the PV module, other components are produced domestically, with rural employment for technicians and in the production of charge controller and solar lamps. However, the solar home systems do not allow for more energy intensive uses such as cooking, water heating or industry, so should not be thought of a full solution to energy access (Kumar and Zubair, 2013)"

Planning and implementation activity
Developing and Implementing Policies and Measures, Financing Implementation
Institutions involved
  • Government of Bangladesh
  • Infrastructure Development Company Ltd.
  • Grameen Shakti and other microfinance institutions
Sectors and themes
Renewable Energy
Energy sub-sectors
Solar
Source details
Global Green Growth Institute (GGGI)

Results supported byUNDPWorld Resources InstituteTransparency partnership