Berlin, February 26 2013 Sanjoy Sanyal, New Ventures India POLICIES SUPPORTING MICROFINANCING OF DECENTRALIZED ENERGY SYSTEMS IN INDIA.

Berlin, February 26 2013

Sanjoy Sanyal, New Ventures India

POLICIES SUPPORTING MICROFINANCING OF DECENTRALIZED ENERGY SYSTEMS IN INDIA

THE SUMMARY UPFRONT

• In India, impact investors has been an important source of fund for companies supplying decentralized energy systems.

• Debt funding/end user consumer funding has been our weak area

• The key challenges we face are:

• How to scale end user funding /consumer debt funding?

• Leverage innovations like crowd funding?

NEW VENTURES INDIA

• Started in 2006

• Current Partner : Regain Paradise Research Consulting

• Facilitated USD 43 million in investments

PORTFOLIO FUNDING: SOURCES

31%

30%

24%

12%

Investment

VC/PECorporateImpact Investors Banks Donors Angels

35.77

7.4

Investments

Financial Investment

Non fin-ancial

USD 43.17 in 22 companies

PORTFOLIO FUNDING: EXAMPLES

Husk Power Systems biomass gasification based rural micro grid company (Acumen, LGT et al)

Greenlight Planet solar personal products company (Bamboo Finance)

Sustaintech : a commercial cookstove ompany (Rianta Capital)

Vayugrid: local biofuels company (Mahindra)

Mera Gaon Power : solar based rural micro grid company (Insitor )

CAPITAL SUBSIDY CUM REFINANCE SCHEME

• This is the key policy in place from November 2010

Administered by NABARD

Part of the JNNSM

• Routing of capital subsidy and interest subsidy to end customers

ROLE PLAYED BY GRAMEEN BANKS

• Regional Rural Banks have provided solar lending

• In partnership with companies such as SELCO, Tata BP Solar and Solid Solar

• Gurgaon Grameen Bank: 10 068 SHSs (by 2012)

• Prathama Bank : 41,058 SHSs

• Aryabhatta Grameen Bank (??)

• The UNEP solar programme helped finance 18,000 households from 2003 to 2007 in South India with partnerships with banks

THE NATURE OF INDIA’S CHALLENGE

• Only 7 of the 70 districts have rural un-electrification rates less than 50%

• 32 of the 70 districts have rural un-electrification rates greater than 80%

• 7 of the 70 districts have rural un-electrification rates greater than 90%

Source: NVI Analysis based on Census data

UTTAR PRADESH

THE NATURE OF INDIA’S CHALLENGE

• None of the 37 districts have rural un-electrification rates less than 50%

• 33 of the 37 districts have rural un-electrification rates greater than 80%

• 19 of the 37 districts have rural un-electrification rates greater than 90%

Source: NVI Analysis based on Census data

BIHAR

AND EVEN IN URBAN SETTINGS

Of the 15 commercial buildings that we surveyed in Chennai regional area only 6 had outage less than 2 hours a day

Of the 5 commercial buildings that we surveyed in Madurai only 1 had outage less than 2 hours a day

Source: NVI Survey in commercial buildings of South Indian cities

BANGLADESH IDCOL SHS PROGRAM

• IDCOL is a Non Banking Financial Institution in Bangladesh

• The SHS Program was started in 2003 with assistance of IDA, GEF under the Rural Electrification and Renewable Energy Development Project (REREDP) of The World Bank.

• Initial target:: 50,000 Solar Home Systems (SHSs) achieved in August 2005, 3 years ahead of schedule and US$ 2 million below the estimated cost.

• Next phase had support from IDA, GTZ, KfW, ADB and IDB.

• IDCOL’s current target is 2.5 million SHS by 2014.

• In April 2012 installation size was 1.4 million SHS

Source: IDCOL Website

KEY FEATURES OF THE IDCOL PROGRAM

• Implemented through Partner Organizations who:

• select areas and customers and install SHS

• extend micro-credit to customers

• provide after sales services

• Currently IDCOL has 46 partner organizations

Source: IDCOL Website

CROWD FUNDING?

Achieved so far•Won an (50%) ANDE grant to develop a crowd-funding platform for impact investments

Goal • Develop a product that can be deployed globally thru partners