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To boost solar hoem systems, a $7.6-million initiative between the United Nations Environment Programme and two of the country's largest banking groups has been launched.

NEW DELHI, March 7

HOUSEHOLDS in the South will now be able to get loans for the high-cost but environment-friendly energy option of photovoltaic solar home systems at lower interest rates.

Towards this end, a $7.6-million initiative between the United Nations Environment Programme (UNEP) and two of the country's largest banking groups has been launched.

With the aim of helping 18,000 households to finance clean and reliable electricity from solar power, especially in Karnataka, Syndicate Bank and Canara Bank are now offering loans in which UNEP is "buying down" the financing cost of photovoltaic solar home systems.

Hence, the households will be able to purchase the solar home systems at an interest rate of about five per cent compared to the normal consumer lending rates of 11-12 per cent.

The programme is being given a push by both the United Nations Foundation and the Shell Foundation so that a more friendly energy alternative is made possible.

A large number of households in the country still rely on inefficient and polluting energy sources such as kerosene, which in turn has negative health, environmental and social fallouts.

In Karnataka, even where grid electricity is available, problems of capacity shortages and inconsistent quality plague the power supply.

This has led households to look to alternative power supply systems such as solar or diesel generators.

Despite high initial costs, solar home systems emerge as an attractive option in the context of costly or unreliable alternatives and escalating grid power tariffs.

Mr Klaus Toepfer, UNEP Executive Director, said: "This initiative helps to meet both environmental and development objectives by overcoming a major barrier to increasing the use of renewable energy - access to finance."

Canara Bank and Syndicate Bank are also financing group lending through linkages with self-help groups.The UNEP partnership will allow both banks to offer new loan products for the growing renewable energy sector through an extensive and established network of rural branches in Karnataka and Kerala.

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