WHEN night falls in remote parts of Africa and the Indian subcontinent, hundreds of millions of people without access to electricity turn to candles or flammable and polluting kerosene lamps for illumination.
Slowly through small loans for solar powered devices, microfinance is bringing light to these rural regions where a lack of electricity has stymied economic development, literacy rates and health.
"Earlier, they could not do much once the sun set. Now, the sun is used differently. They have increased their productivity, improved their health and socio-economic status," said Pinal Shah from Sewa bank, a micro-lending institution.
Vegetable seller Ramiben Waghri took out a loan to buy a solar lantern which she uses to light up her stall at night. The lantern costs between $66-$112, about a week's income for Waghri.
"The vegetables look better by this light, and it's cheaper than kerosene and doesn't smell," said Waghri, who estimates she makes about 300 rupees ($F12.60) more each evening with her lantern.If we can use the sun to save some money, why not?"
In India, solar power projects, often funded by microcredit institutions, are helping the country reduce carbon emissions and achieve its goal to double the contribution of renewable energy to 6 per cent, or 25,000 megawatts, within the next four years.
Off-grid applications such as solar cookers and lanterns, which can provide several hours of light at night after being charged by the sun during the day, will help cut dependence on fossil fuels and reduce the fourth biggest emitter's carbon footprint, said Pradeep Dadhich, a senior fellow at energy research institute TERI.
"They are reaching people who otherwise have limited or no access to electricity, and depend on kerosene, diesel or firewood for their energy needs.The applications not only satisfy these needs, they also improve the quality of life and reduce the carbon footprint."
Sewa, or Self Employed Women's Association, is among a growing number of microfinance institutions in India focused on providing affordable renewable energy sources to poor people, who otherwise would have had to stand for hours to buy kerosene for lamps, or trudge miles to collect firewood for cooking.
"Providing electricity is a government responsibility, but it's a gigantic task and the government alone cannot do it," said Shirish Garud, coordinator of the Renewable Energy and Energy Efficiency Partnership (REEEP) in south Asia.
"In many cases, the end-user has no access to conventional banking and financial services, which is why we need MFIs."
In Africa too, micro-loans are bringing solar systems to homes, schools and cottage industry businesses in remote regions, off-the-grid. Poor people use money they would have spent on kerosene to pay back their loans for the solar devices.
Billion lamps
Hundreds of millions of people in India have little or no access to electricity. Yet demand for power by industries in a country which saw its GDP at or above 9 percent in the three years to 2007/08 has taken a toll on capacity and infrastructure.
Of the 76 million homes in India that have no access to electricity, 65 million use carbon-emitting kerosene, according to REEP. Kerosene is highly flammable and the fumes are noxious. Every year thousands of people in developing countries die from accidents involving kerosene stoves and lamps.
Developing nations now emit more than half the world's greenhouse gases and that figure is set to rise.
In India, greenhouse gas emissions are expected to jump to between 4 billion tonnes to 7.33 billion tonnes in 2031. There is no figure for India's current greenhouse gas emissions.
Its per capita emissions, estimated at 1.2 tonnes, are expected to rise to 2.1 tonnes by 2020, according to a recent government-funded study.
India adds about 10 gigawatts of power every year and is likely to see a shortfall of as much as 21,000 MW as capacity expansion fails to keep up with demand, leading to more outages. Solar power will ease some strain on the grids.
In neighbouring Bangladesh, the state-owned and private sector power plants can generate between 3700 to 4300 megawatts of electricity a day, against a demand of 5500 megawatts, according to the state run power development board.
Since 2001, 350,000 solar home systems have been installed in Bangladesh and 550,000 solar lanterns have been distributed, bringing solar power to around 4 million people.
Alternative power
In India, renewable energy makes up less than 3 per cent of the country's total installed capacity, with wind accounting for much of this contribution.
Investor interest in solar is growing, and a new solar plan for the country is to be unveiled by December, around the same time as a global climate change summit in Copenhagen.
In Gujarat, which launched its own solar mission earlier this year, mega solar parks are planned. But even here, it is microfinance that is helping power lights and stoves in rural homes and small towns, where power outages are common.
REEEP, which is developing 10 renewable energy projects with microfinancing, estimates that 234 billion rupees ($9.4 billion) is needed to provide solar lanterns to 65 million rural homes.
This amount is less than half of the total subsidy the government provides to make kerosene affordable for the poor.
Some of this money will come from MFIs, who face a much smaller risk on the small, short-term loans for solar appliances.
REEEP, along with energy research institute TERI, is spearheading the "lighting a billion lives" campaign, which seeks to replace kerosene and paraffin lanterns with solar devices.
