Habitat Observatory

    Affordable Loans for Renewable Energy Systems in Houses
  Access to electricity and clean cooking can provide great benefits to poor households in India. Karnataka based ShriKshethraDharmasthala Rural Development Project (SKDRDP) recognizes the value of energy access as a key component of development and since 1999 has provided information and loans for sustainable energy technologies.

At the village level, SKDRDP officers encourage neighbors to come together to form self-help groups offive to 20 people. Each group has to follow set procedures to save a fixed amount (at least US$0.20). The SKDRDP officers help each group member make a five-year plan of how they propose to spend their savings. The self-help groups get the opportunity to avail energy loans only after they have been running successfully for two years.

SKDRDP has developed expertise in renewable energy technologies and has built up an ‘approved list’ of reliable suppliers from whom group members can make purchases. These suppliers provide good technology and after-sales service and also provide information on government subsidies if any. SKDRDP officers provide information on different technologies at village meetings where suppliers are allowed to give short presentations.

SKDRDP has created a loan product for each of the technologies that it supports such as solar home systems, biogas plants and very small ‘pico’ hydroelectric plants. Loans are for 100% of the cost of the system and charged at 18% annual interest rate (well below the government maximum of 26% for microfinance). They have to be paid back in weekly installments of around US$3 over 150 weeks.

Till February 2012, SKDRDP had provided loan finance for 10,538 biogas plants, 8,379 solar home systems and 176 pico-hydro plants, a total of nearly 20,000 systems. Nearly all the households who use solar home systems and pico-hydro are off-grid and have replaced kerosene lamps, saving approximately 140 litres of kerosene per year. This cuts greenhouse gas emissions by an average of 0.35 tonnes/year of CO2 per household, or a total of 2,700 tonnes/year of CO2.

According to Suresh, a member of the self-help-group Jeevanjyothi, “It used to take us a lot of time to gather wood for cooking. Sometimes, we would pay people to gather it for us but that wasn’t cheap! One day I saw a biogas plant in my neighbors’ farm and liked it very much. So we took a loan for a biogas plant and it’s worked very well for us. The kitchen is a lot cleaner. There isn’t soot everywhere like before.”

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    Round Table Discussion on the “Potential of credit based eco-housing for rural and peri-urban areas of India”
  A Round Table on the “Potential of credit based eco-housing for rural and peri-urban areas of India” was successfully conducted on 28th June 2013 at the Building Materials and Technology Promotion Council (BMTPC) office, New Delhi. The round table was organised by Development Alternatives (DA) in collaboration with BMTPC and Fondazione FEM Onlus.

Representatives from the National Housing Bank (NHB), Building Material and Technology Promotion Council (BMTPC) and other financial institutes participated in this round table and shared their experiences of working in the area of eco-housing. The participants also discussed possibilities of future partnerships for carrying forward the eco-habitat work using credit based models.

The Development Alternatives team shared its experiences of providing low cost environment friendly housing to the working poor in rural areas through the eco-housing + model. Tackling the dual challenge of providing adequate shelter to our rural population while reducing resource and carbon footprint of construction activities, this housing model creates a complete ecosystem of financial and technical services. While working on the ground to develop this eco-housing + model, the team at Development Alternatives realised that the financial infrastructure necessary to ensure sustainability is a major area of concern.

Dr. ShaileshAgarwal, Executive Director of BMTPC in his inaugural address talked about the difficulties in credit based eco-housing in rural areas and appreciated DA for taking a step forward in this direction. He highlighted problems such as the dismal performance of banks in disbursing loans to poor people, lack of entrepreneurs for producing green construction materials and improper implementation of schemes focusing on affordable rural housing.

In the key note address, Ms. ZeenatNiazi, Vice President, Development Alternatives talked about the construction sector being extremely high in its energy and resource footprint. Therefore cleaner production, augmentation of supply of building materials, improving access and increasing affordability are imperative to ensure sustainability. The approach for eco-housing should focus on reducing environmental costs, introducing cost-effective techniques, building local capacities and introducing appropriate financing mechanisms. Ultimately, the main focus should be on turning the construction sector green.

After the intense sharing of experiences, a discussion was facilitated on the ‘Way Forward’.

Some of the key inputs from the discussion are highlighted below:
• The Eco-Housing+ model should be replicated in other areas in coordination with SwarnaPragati Housing Finance Corporation which showed interest in taking the same forward.
• Innovative models for financing should be explored.
• The National Housing Bank (NHB) should explore the option of starting a ‘Facilitation Guarantee Fund’.
• Higher amount of customisation of housing loans is required for rural areas. Safety concerns should also be integrated.
• Material banks at block level should be set up to aggregate green building materials. These can be utilised for construction purposes whenever required.
• Training of masons in eco-building services is required. Training modules can be developed for the training and capacity building of the workforce as that remains a major hurdle in taking the eco-construction work forward.
• BMTPC and NHB should work together to solve the issue of lack of skilled labour and building materials.

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