Microfinance: Taking RE to the ‘Former Poor’

  • Srinivasan Sunderasan
Part of the Green Energy and Technology book series (GREEN)


Through most of the length of this text, we have discussed the significance of economic variables such as prices, fiscal incentive structures and of the importance of tailoring financing structures to suit the product and the stage in its life-cycle. In this chapter we discuss the role played by micro-finance institutions in enhancing the uptake of (primarily standalone) RE technologies. Micro-banking facilities have helped large numbers of developing country nationals claw their way out of abject poverty, specifically by supporting the establishment and growth of microenterprises. And yet, the microfinance movement has grown on the back of passive replication and the movement now needs to be revitalized with new product offerings and innovative service delivery. Domestic RE systems may not inherently be income generating, and returns on such investments accrue, primarily, from cost avoidance. By definition, and often by explicit regulatory limitation, domestic RE applications do not qualify for micro-funding. ‘Quality of life’ investments such as RE systems, funded through non-self-liquidating loans, reflect borrower maturity and simultaneously contribute to MFI sustainability. Larger loan amounts and longer tenures reduce credit appraisal and service delivery costs per dollar lent. By promoting the consumption of RE systems, MFIs would be contributing to environmental conservation, as well. Innovative institutional structures need to evolve to facilitate the progression of the MFIs into more formal outfits, capable of accessing refinance and capital from banks and commercial investors, and of providing larger loan sizes for longer tenures.


Renewable Energy Asian Development Bank Microfinance Institution Loan Size Biogas Digester 
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Copyright information

© Springer-Verlag London Limited 2011

Authors and Affiliations

  1. 1.Verdurous Solutions Private LimitedKuvempunagar, MysoreIndia

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