Financing for Whom by Whom? Complexities of Advancing Energy Access in India

July 25, 2017

About a quarter of India’s population still lives without access to modern electricity. The majority of these people live in rural, remote areas which cannot be easily connected to the central grid. Supplying those without power and supplementing the intermittent electricity provision of those who are connected has become a central goal of the government. In working to achieve this goal, India has become a laboratory for innovative energy systems as well as finance structures that enable customers to gain access to these systems. By exploring case studies of different financing structures as well as interviewing solar technology business owners, I find that end-user financing (i.e. consumer subsidies and tax rebates) is relatively ineffective at enhancing sales of off-grid solar technologies. End-user financing relies on formal banking systems and hinders firms from passing on subsidized costs because of extenuated bureaucratic cost recovery. Alternatively, innovative financing structures, such as pay-as-you-go (PAYG) systems, crowdfunding, and different types of support for private companies and entrepreneurs have all shown promise to provide adaptable and timely support. If the government is to make meaningful progress toward its national goal to extend a constant supply of electricity to every household in the coming years, it will need to learn from and adapt its current financing structures for off-grid solar (and other renewable energy) technologies.

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