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Microfinance for solar home systems

Microfinance for solar home systems

Scaling up solar home systems through innovative financial flows in Bangladesh.
Themes
  • Finance
Location

Bangladesh, Asia

Case Summary

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)

Results supported byUNDPWorld Resources InstituteTransparency partnership