As India celebrates 70 years of its independence, solar energy is changing lives by accelerating clean energy access for all – solving energy poverty and climate change at the same time. In 1947, the newly independent country had about 1,500 villages with access to electricity. By the end of 2015 more than half a million villages have electricity. However, there is still a long way to go. India has the largest number of people in the world without access to electricity. Solar energy, including decentralized solar off-grid and mini grids are proving to be immediate solutions to extend clean energy access to those who need it most.
Together with our partner the Self Employed Women’s Association (SEWA), NRDC is working to scale up clean energy access with the salt farmers in Gujarat. From just 15 households two years ago, over 400 households in the Little Rann of Kutch have now transitioned from using diesel to solar energy for their livelihood and energy needs. Insights from the success of this project are useful in the larger context of serving underserved off-grid populations and overcoming barriers to clean energy access.
Need for dedicated institutional support
The SEWA members, women in rural India, often face challenges in obtaining the capital needed for upfront technological investments, as do many small and medium enterprises working to provide off-grid solar energy access. Traditional lenders such as commercial banks hesitate to finance small, disaggregated projects with high perceived risk. A dedicated green finance institution like a green investment fund can be catalytic in mitigating or assuming higher risk and bringing private lenders on board to expand the market. Leveraging patient public capital and using specialized expertise, a green investment fund can lower the cost of capital and steer domestic and international private investment into underserved clean energy markets. Institutional support through the green investment fund can complement and collaborate with other financial initiatives such as the US-India Clean Energy Finance (USICEF) which supports the early stage development of distributed solar power projects.
Financial inclusion for clean energy access
Access to formal credit facilities and offering competitive lending terms makes investing in clean energy more attractive and viable for low-income communities. While India’s “unbanked population” is one of the largest in the world, bigger than 220 other countries. Millions of new accounts have been opened in India over the last five years. Similar to bank accounts, an initial step for financial inclusion is having identity cards. Over the last two years, with help from SEWA, a majority of salt farmer households obtained identification documents for the first time, making it easier for them to open bank accounts and take loans for buying solar water pumps. National development finance institutions like the National Bank for Agriculture & Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI) are exploring opportunities to better serve rural communities. Integrating clean energy with financial inclusion goals can be effective in scaling these efforts across the country.
Creating employment for India’s growing workforce
Clean energy deployment provides a tremendous opportunity to create domestic jobs for a fast-growing young population. Analysis by NRDC and our partner the Council on Energy, Environment and Water (CEEW) shows that distributed solar creates more jobs per unit of energy produced than any other energy source. Renewable energy requires personnel with all skill levels. Inspiring energy delivery models including basic troubleshooting, operations and maintenance of equipment are already emerging in villages and small towns accompanying installation of solar modules and min-grids. We are working with Skills Council for Green Jobs and other stakeholders in identifying and filling the skill gap to meet clean energy requirements.
India has made remarkable progress in rapidly scaling up clean energy over the last five years. While most of the installed capacity has come in the form of grid-connected utility scale projects, the off-grid market is a major opportunity. Developing and implementing strong policies, and increasing the flow of investment into clean energy access in the next few years will be critical to shape India’s success in empowering the country’s vast underserved population and unlocking the true value of freedom for all its citizens.