The United States Agency for International (USAID) and the US International Development Finance Corporation (DFC) has sanctioned $41 million-loan guarantee program to finance investment in renewable energy solutions by Indian SMEs.

A statement reveals, "USAID and DFC are jointly sponsoring a $ 41 million loan portfolio guarantee to help finance investments by Indian small and medium enterprises (SMEs) in renewable energy solutions, including rooftop solar installations. These loans will enable SMEs to access reliable power and cut costs," a statement said.

Accordint to USAID/India's Acting Mission Director Karen Klimowski Investments in solar solutions would be secured by these credit guarantees, which would improve the access to clean, steady, and affordable energy and also extend the progress towards India's clean energy transition and climate change mitigation.

The country’s commercial and industrial sectors pay high fees for their electricity, making rooftop solar a sustainable, cost-saving investment, but SMEs and residential consumers face obstacles in securing the funds needed to install and use rooftop panels, reveals the statement.

Out of the total energy consumed by the country’s industrial sector about 48 percent energy are utilised by the SMEs Rooftop solar power generation offers a win-win, it said, adding that lower monthly energy costs drive important social benefits, including job creation and economic growth, while reducing carbon emissions and improving air quality.

Thus, USAID and DFC have collaborated with the New York-based Encourage Capital, an environmentally focused investment firm, and the two Indian non-banking financial companies, cKers Financial and woman-owned Electronica Finance Limited (EFL), to deal with this challenge.

Therefore, Encourage Capital has invested about $15 million in EFL, which would use the USAID-DFC loan portfolio guarantee to stimulate the rooftop solar market - representing a $ 9 billion market opportunity - for SMEs.

Consequently, USAID would continue its support by providing technical assistance to address quality and safety concerns in the rooftop solar market. Once these credit guarantees lower the financial hurdle for installing rooftop solar, India will realise numerous benefits resulting from the transition to this green technology.

These guarantees have the capacity to unlock lifesaving social benefits and robust economic growth.