Credit Financing of Solar Home Systems (SHS) for Deprived Communities in Rural Nepal

Duration: July 2010 to August 2013
Project Location: Ilam, Jhapa, Panchthar, Taplejung, Udayapur, Dhading, Nawalparasi, Palpa, Tanahu, Jajarkot, Kalikot, Salyan, and Doti
Partners: Frankfurt School of Finance and Management (FSFM), ACE Development Bank, Sahara Nepal, Sahamati and Local Financial Institution
Focal Person: Mr. Binod Prasad Shrestha
Status: Completed

About 2.4 million households in Nepal use kerosene and locally available resources such as flammable wood called “Jharro” for lighting. This light is poor in quality, and the resultant indoor air pollution causes health problems, especially for women and children. Most households in Nepal do not have access to grid connected electricity; renewable energy sources such as SHS are available with government quality standards (RETS pass Solar PVs) from the PQ listed solar vendors as better alternatives for clean and sustainable household lighting in off-grid rural areas. However, poor households in rural areas cannot afford this technology due to high upfront cost. Access to microfinance is therefore vital to reach households that can afford SHS only with credit. Grassroots-level financing institutions like Local Financial Institutions (LFIs) can play an important role in providing access to credit to the poor.

The Memorandum of Understanding was signed between Frankfurt School of Finance & Management (FSFM), Ace Development Bank Ltd. (Ace), and Winrock International (WI) brings all three parties together in the Credit Financing of Solar Home Systems (SHS) for Deprived Communities in Rural Nepal project. The activity is supported by the United Nations Environment Programme (UNEP) Climate Finance Innovation Facility (CFIF).

This support will extend the reach of SHS in rural households and improve long term sustainability of the program.