AHMEDABAD, India (Reuters) - When night falls in remote parts of Africa and the Indian subcontinent, hundreds of millions of people without access to electricity turn to candles or flammable and polluting kerosene lamps for illumination.
Slowly through small loans for solar powered devices, microfinance is bringing light to these rural regions where a lack of electricity has stymied economic development, literacy rates and health.
“Earlier, they could not do much once the sun set. Now, the sun is used differently. They have increased their productivity, improved their health and socio-economic status,” said Pinal Shah from Sewa bank, a micro-lending institution.
Vegetable seller Ramiben Waghri took out a loan to buy a solar lantern which she uses to light up her stall at night. The lantern costs between $66-$112, about a week’s income for Waghri.
“The vegetables look better by this light, and it’s cheaper than kerosene and doesn’t smell,” said Waghri, who estimates she makes about 300 rupees ($6) more each evening with her lantern.
“If we can use the sun to save some money, why not?”
In India, solar power projects, often funded by microcredit institutions, are helping the country reduce carbon emissions and achieve its goal to double the contribution of renewable energy to 6 percent, or 25,000 megawatts, within the next four years.
Off-grid applications such as solar cookers and lanterns, which can provide several hours of light at night after being charged by the sun during the day, will help cut dependence on fossil fuels and reduce the fourth biggest emitter’s carbon footprint, said Pradeep Dadhich, a senior fellow at energy research institute TERI.
“They are reaching people who otherwise have limited or no access to electricity, and depend on kerosene, diesel or firewood for their energy needs,” he said.
“The applications not only satisfy these needs, they also improve the quality of life and reduce the carbon footprint.”
Sewa, or Self Employed Women’s Association, is among a growing number of microfinance institutions in India focused on providing affordable renewable energy sources to poor people, who otherwise would have had to stand for hours to buy kerosene for lamps, or trudge miles to collect firewood for cooking.
SKS Microfinance, India’s largest MFI, offers solar lamps to its 5 million customers, while Grameen Surya Bijlee (Rural Solar Electricity) Foundation helps fund lamps and home and street lighting systems for villagers in India, Nepal and Bangladesh.
“Providing electricity is a government responsibility, but it’s a gigantic task and the government alone cannot do it,” said Shirish Garud, coordinator of the Renewable Energy and Energy Efficiency Partnership (REEEP) in south Asia.
“In many cases, the end-user has no access to conventional banking and financial services, which is why we need MFIs.”
The Aryavart Gramin bank has approved loans for the installation of 8,000 solar-home-systems in Uttar Pradesh, India’s most populous state and a key grain growing region.
In Africa too, micro-loans are bringing solar systems to homes, schools and cottage industry businesses in remote regions, off-the-grid. Poor people use money they would have spent on kerosene to pay back their loans for the solar devices.
Hundreds of millions of people in India have little or no access to electricity. Yet demand for power by industries in a country which saw its GDP at or above 9 percent in the three years to 2007/08 has taken a toll on capacity and infrastructure.
Of the 76 million homes in India that have no access to electricity, 65 million use carbon-emitting kerosene, according to REEP. Kerosene is highly flammable and the fumes are noxious. Every year thousands of people in developing countries die from accidents involving kerosene stoves and lamps.
Developing nations now emit more than half the world’s greenhouse gases and that figure is set to rise.
In India, greenhouse gas emissions are expected to jump to between 4 billion tons to 7.33 billion tons in 2031. There is no figure for India’s current greenhouse gas emissions.
Its per capita emissions, estimated at 1.2 tons, are expected to rise to 2.1 tons by 2020, according to a recent government-funded study.
India adds about 10 gigawatts of power every year and is likely to see a shortfall of as much as 21,000 MW as capacity expansion fails to keep up with demand, leading to more outages. Solar power will ease some strain on the grids.
In neighboring Bangladesh, the state-owned and private sector power plants can generate between 3,700 to 4,300 megawatts of electricity a day, against a demand of 5,500 megawatts, according to the state run power development board.
With only 40 percent of the country’s people having access to electricity, microfinance institutions such as Grameen Bank have made a major push toward expanding the use of solar power.
Since 2001, 350,000 solar home systems have been installed in Bangladesh and 550,000 solar lanterns have been distributed, bringing solar power to around 4 million people.
“Right now 2.5 million people are benefiting from solar energy and we have a plan to reach 10 million people by the end of 2012,” said Dipal Chandra Barua, managing director of Grameen Shakti, an offshoot of 2006 Nobel Peace Prize winner Grameen Bank which encourages the use of alternative energy.
In India, renewable energy makes up less than 3 percent of the country’s total installed capacity, with wind accounting for much of this contribution.
Investor interest in solar is growing, and a new solar plan for the country is to be unveiled by December, around the same time as a global climate change summit in Copenhagen.
In western Gujarat state, which launched its own solar mission earlier this year, mega solar parks are planned. But even here, it is microfinance that is helping power lights and stoves in rural homes and small towns, where power outages are common.
REEEP, which is developing 10 renewable energy projects with microfinancing, estimates that 234 billion rupees ($49 billion) is needed to provide solar lanterns to 65 million rural homes.
This amount is less than half of the total subsidy the government provides to make kerosene affordable for the poor.
Some of this money will come from MFIs, who face a much smaller risk on the small, short-term loans for solar appliances. REEEP, along with energy research institute TERI, is spearheading the “lighting a billion lives” campaign, which seeks to replace kerosene and paraffin lanterns with solar devices.
Launched last year with partners including the Clinton Climate Initiative, it has so far covered more than 100 villages.
Sewa’s Project Urja (“energy”), with funding from U.S.-based Lemelson Foundation, partners with India’s Solar Electric Light Co (SELCO) to improvise lighting and cooking devices.
“It’s cheaper, healthier and it’s low maintenance,” said Pinal Shah, in charge of energy projects at Sewa Bank, which has disbursed more than 6 million rupees ($124,000) in loans for solar appliances to about 10 percent of its 300,000 members.
SELCO’s other devices include headlamps for midwives, solar lights for farmers breeding silk worms for India’s silk industry and sewing machines powered by solar power.
In the congested Jamalpur neighborhood in Ahmedabad, Salma Mohammad’s small corner shop is lit by a solar-powered battery that she bought with a loan of 33,000 rupees from Sewa Bank.
“This shop has helped me raise my children,” she said. “The solar battery has improved our lives, given us much to be grateful.”
Additional reporting by Serajul Islam Qiuadir; Editing by Megan Goldin