Presentations

Risks for Small Hydro Projects - Bhoruka Power has set up several small hydro projects and shared the risks associated.

Financing for Solar home systems - Shri K.M. Udupa, ex-Syndicate Bank has been one of the pioneers in providing rural financing for solar home systems.

Financing for Solar home systems

Shri KM Udupa - Bhartiya Vikas Trust

Shri K.M. Udupa, ex-Syndicate Bank has been one of the pioneers in providing rural financing for solar home systems. In his speech Mr. Udupa highlighted the dire straits of lighting in the country. There are still a large number of villages that are not electrified. Mr. Udupa stressed that light was also a primary need along with food, clothing and shelter. Mr. Udupa further stressed that solar was a proven technology and a tested solution for rural electrification. It was indeed surprising that the uptake of solar has not increased at a faster pace. Mr. Udupa argued that it is not true to say that solar systems are not affordable. His view point was that financial institutions can provide financial products that can be afforded by the users. Mr. Udupa elaborated on some of the more innovative measures taken by Syndicate Bank to promote solar and biogas plants. There were cases where longer term loans were provided by banks to satisfy the consumer needs and to make it affordable for them.

Mr. Udupa then went on to talk about capacity building initiatives for banks. He felt that bankers cannot be expected to promote or support a technology unless they understood the basics of the same and were convinced that a particular technology works. Hence, the need for capacity building initiatives. Mr. Udupa then provided details about a program that his organization has implemented with the support of USAID and Winrock. As part of the program, Bhartiya Vikas Trust (BVT) had initially trained some 1000 bankers in providing financing for solar homes. This number went onto increase to over 6500. Training was provided through short one day programs which introduced both technical aspects and role of banks in financing solar.

Mr. Udupa then went onto explain that they have come up with several innovative ideas to convince the poor that light is an important requirement for them and also to design schemes which would enable the poor to use the light to their best advantage. For e.g. in one village where the users did not have funds for down payment (margin money). BVT lent this money to the users. The rest of the system was funded by banks. The repayment of the system cost was designed in such a manner that it did not cost the users any more than what they were already spending on existing sources of lighting (for e.g. kerosene lamps)

The speaker then emphasized that solar as a technology is proven and accepted in rural areas. Rural banks and organizations like BVT have designed schemes that make such systems affordable to the user. However, one needs to keep in mind constraints like shortages of panels or not enough technicians. These are not insurmountable issues but need to monitor these closely. The most imperative issue to the success of solar is to design schemes that make these affordable to the poor and link the use of solar to key areas such as education.

One of the most important things that Mr. Udupa discussed was the need of group insurance for system failure or breakdown and also insurance against natural calamities. He argued that there are sufficient volumes to interest the insurance sector. Mr. Udupa also urged MNRE to look at the solar programs in a very serious manner and to formulate policies that promote and not smother the technology (for e.g. VAT on solar home systems).

Mr. Udupa was also of the opinion that such conferences are extremely valuable in bringing all relevant stakeholders together and would be interested to be part of such proceedings in the future.