Financing Solar LED System

Most inhabitants who lack access to grid electricity are categorized as low income. Low-income consumers often do not have the initial investment needed to pur­chase new lighting products due to high up-front costs of LED solar home systems (SHS). A recent report shows that approximately 90% of households lack access to formal financial services [20], a primary means of acquisition. Financial institu­tions (FIs) are often hesitant to lend to consumers due to the risk factor of non­receipt of loans. Moreover, available financing is often security based. In fact, access to finance is the biggest hurdle to scaling-up the solar lighting market. A lack of financing options, including limited access to long-term growth capital as well as short-term working capital are also significant barriers to market growth. Figure 5.8 shows the various financial institutions which could be helpful to provide solutions to finance LED SHSs. Rural Banks, Commercial Banks, National Banks, Cooperative Banks, Rural Farmer Cooperatives, and NGOs are

imperative to develop financial solutions to obtain the necessary credit to cus­tomers for purchase of solar lighting. If the targeted population segment does not have access to formal financial services, informal finance mechanisms should be made available to ensure the financial transactions.

Updated: August 22, 2015 — 12:34 am