Rural India Benefits From UN Loan Program To Buy Solar Lights, Do Business Better

According to a recent report from the UN Environment Programme (UNEP), more than 100,000 people in rural India have already taken advantage of a program in place since 2003 designed to make it financially feasible for poor families and small business owners to do business better by investing in small solar-powered lighting systems.

This solar power initiative is not only good for businesses and and the environment, it improves people's health, according to UNEP.

Funded at only $1.5 million, the project works primarily with Indian bankers to help them do business better by reducing their risks and increasing their profits when providing financing to locals families and businesses who then use the borrowed money to purchase a solar-powered lighting system. Under the UNEP supported program, banks are able to offer lower interest rates, longer payback periods, and smaller cash down-payments.

Before the UNEP project made financing more readily available, the primary way to obtain a system like this was to pay cash, which put them out of reach of most rural Indian households and businesses. For most prospective buyers, the upfront cost of going solar to make their home or business better was equivalent to more than a dozen years' worth of their expenditures for more conventional lighting.

The solar systems are capable of powering as many as four small electrical appliances or lights, and cost less than $500. Once installed in homes and shops, the systems help run the home or business better by reducing or eliminating the need for lighting and heating systems that were formerly fueled by expensive and environmentally polluting kerosene.

Still restricted to a pilot program only in parts of southern India, the project's acceptance and number of borrowers has increased many times since it began in 2003.

The advantages of installing these small solar systems are many. UNEP workers say the solar-powered lighting systems help schoolchildren earn better grades, and allow family-operated businesses to produce more goods for sale, thus raising their incomes. The systems are also credited with health benefits, simply because the elimination of kerosene, from the poorly ventilated homes and businesses that are typical in rural India, frees the occupants from continuing exposure to the harmful smoke and soot normally emitted by kerosene lamps.

In addition, UNEP has calculated that a single kerosene lamp burns about 80 litres of the fuel each year, which results in more than 200 kg of carbon dioxide being released into the atmosphere, contributing to the world's total greenhouse gas emissions and to global warming. Although any one family's kerosene consumption is small, some 100 million families in India still rely the relatively dirty and unsafe fuel, and might otherwise continue to do so for many years to come.

The success of this UNEP program in rural India has led to the initiation of similar loan-subsidy programs in Tunisia, although there the funds are generally used to buy solar-powered water heaters. Plans are also underway to set up the same kind of programs in China, Indonesia, Egypt, Mexico, Ghana, Morocco and Algeria.

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Photo credit: comedy_nose