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Financing of Renewable Energy Projects for Microfinance Institutions in India

Funding for Renewable Energy Projects

Indian Renewable Energy Development Agency (IREDA), established in 1987 as a Public Limited Government Company, under the administrative control of MNRE, is a specialized developmental financial institution with the objective to provide financial support to specific projects and schemes for generating electricity and/or energy through new and renewable sources and conserving energy through energy efficiency.

It offers term loans to renewable energy projects at rates slightly more favorable than general commercial lending rates. As of March 31, 2010, IREDA financed 1,921 projects with a loan commitment amounts totaling over Rs.121.8 billion.

Other government agencies that actively fund renewable energy projects are the Power Finance Cooperation (PFC), the Rural Electrification Corporation (REC), and National Bank for Agricultural and Rural Development (NABARD). Corporate financiers of renewable energy projects in India are primarily concentrated on the large wind and hydropower projects, where captive power generation and the application of accelerated depreciation benefits play a significant role.

Of late, the growing awareness and favorable government policies & regulatory mechanisms (both at Central & State level) have led to gradual increase in confidence of domestic commercial banks providing loans to renewable energy projects.

Renewable Energy and Microfinance

A number of microfinance institutions (MFIs) facilitate the purchase of renewable energy systems like solar cookers, solar lanterns, or small biogas plants in off-grid areas of the country. The Self Employed Women’s Association (SEWA) is perhaps the most well-known example of an MFI in India.microfinance renewables

Abhay N

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Abhay is the founder and managing editor of India Microfinance. He is passionate about microfinance, financial inclusion and social entrepreneurship in India.

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3 Comments

3 Comments

  1. S.K.SINGH

    January 18, 2011 at 12:37 pm

    International Summite: ‘Sustainable Energy Development: time for innovation and integrated planning’, it will be organized between 27-31 Jan’11 at Visvesvaraya National Institute of Technology (VNIT), Nagpur with support from Bureau of Energy Efficiency, Petroleum Conservation Research Association, Society of Energy Engineers and Managers along with NEERI, MGIRI and 20 prominent institutions of our country dealing with energy saving and alternative energy sources and NGOs working for Energy Efficiency and Renewable Energy Systems.
    Carbon emission is fast becoming a huge problem for the entire world. Its impact is evident in form of climate changes around us. We will have to commit for the generations to come that without any support from the state we will become self-reliant in field of alternate energy.
    To make it happen scientists and thinkers from around the world are meeting to brain storm the possibilities at 1st India International Energy Summit on 28-30 Jan’11 at VMIT, campus Nagpur. Mr.S.K.Singh-National Sales Manager (Alternate Energy), True Power International Limited has been invited to speak on “Solar Micro Finance”, with an experience of over nineteen years in sales Mr. Singh has done a commendable job in deep rural and non electrified areas in making available clean energy equipments through micro finance.
    “1st India International Energy Summit” is being organized under Rashtriya Urja Jana-Jagriti Abhiyan (RUJJA) under Ministry of New and Renewable Energy. It is a gigantic effort which essentially needs massive mobilization and mass motivation of the entire society for energy security of India.

  2. PIJUSH GHOSH

    October 26, 2011 at 8:58 am

    WE ORGANISE AN N.G.O. WE ARE VERY MUCH INTERESTED IN THE INTRODUCTION OF SOLAR ENERGY .PL, MAIL US HOW CAN WE INTROUCE IT? HPW CAN WE GET FUNDS?

  3. sarabjit kaur

    January 28, 2012 at 1:08 pm

    we are manufacturer of electronic items from last 8 years and we are iso certified firm. now we have also started manufacture of solar products. pls guide us how to get loan or finance as we need to increase the manufacturing of solar products.

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