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Links between microfinance & renewable energy

Microfinance Institutions offer a diversified set of financial services to finance income-generating activities. The link with renewable energy is twofold:

Microfinance Institutions offer a source of finance to buy cost-effective energy sources, including renewable energy. This can include the installation, operation or maintenance of energy equipment (solar, biomass, wind-energy…)
By providing financial services to the poor, MFIs can support income-generating activities linked to the environment The RENDEV project aims to explore as many models linking microfinance & renewable energy as possible.

CASE STUDY 1: A microenterprise to recharge mobile phone batteries, Bangladesh

Not long ago, rural areas in Bangladesh still had very little communication equipment. Grameen Shakti provides loans that beneficiaries use to buy a solar home-system to recharge mobile phones. The total cost of the system is 250$US. The financial deal with Grameen Shakti includes a 25% down payment (62.5 $US) and an 8% interest rate loan for the remaining 75%. The loan is reimbursed over two years, with an 8.54 $US monthly repayment. On average, after deducting the loan repayments, the microentrepreneur earns 91$US per month thanks to his mobile phone recharge business.
CASE STUDY 2: Provision of biogas bio-digesters in rural areas, Chine Tongwei County in Gansu Province, Northwestern China, is one of the country’s poorest areas where the 420,000- population mainly subsists on agricultural activities. The region is notable for a lack of energy which restrains the local area’s agrarian development and any chance of improving the income levels of the poor farmers. A government-sponsored programme has been launched to promote the use of biogas and this programme is paying part of the cost of biogas bio-digesters with a solar panel component. Demand for biogas installations is rising among farmers but many candidates do not have the means of financing the amount not subsidized by the local government. A local microfinance institution developed a microloan specially dedicated to Renewable Energy (RE) access. The loans are used to install biogas pits and solar panels and provide energy to the farmers.