The United States Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) are together sponsoring a $41 million loan portfolio guarantee to aid investments by Small and Medium Enterprises (SMEs) in renewable energy in India, a statement from the US embassy said on Thursday.
These include rooftop solar installations and the loans will enable SMEs to access reliable power and cut costs, the statement said.
“USAID, India is pleased to promote power diversification and support local businesses in India. 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,” Karen Klimowski, USAID’s India Acting Mission Director said.
While India’s commercial and industrial sectors pay high fees for their electricity, making rooftop solar a sustainable, cost-saving investment, SMEs and residential consumers face obstacles in securing the financing needed to install and use rooftop panels, the statement said.
SMEs account for 48% of the total energy consumed in India’s industrial sector. For them, rooftop solar power generation offers a win-win, with lower monthly energy costs driving important social benefits like job creation and economic growth. Simultaneously, it helps reduce carbon emissions and improve air quality.
USAID and DFC partnered with the New York-based Encourage Capital, an environmentally focused investment firm, and two Indian non-banking financial companies, cKers Financial and Electronica Finance Limited (EFL), to address this challenge, the statement said.
Encourage Capital has invested $15 million in EFL, which will use the USAID-DFC loan portfolio guarantee to stimulate the rooftop solar market—representing a $9 billion market opportunity—for SMEs, it said.