Expanding the Role of Microfinance in Promoting Renewable Energy Access in Developing Countries

This paper argues that limited resources create a policy trade-off between environmental protection and economic development in developing countries. Policy action in the area of renewable energy technologies would reduce these trade-offs. These technologies are cheap and reliable; and promote economic growth by providing increased access to energy. They are also able to reach off-grid, rural areas where most people in developing countries live. Once poor countries gain access to reliable sources of energy, they can use these as a tool to address complex problems of poverty and climate change. The article proposes ways in which developing countries could expand the role of MFIs to finance renewable power generation and distribution, and make them more affordable to consumers and industry. These include:

• Setting targets for renewable energy access and generation;
• Encouraging private sector involvement in renewable energy development;
• Expanding the reach of renewable energy technologies;
• Training microfinance leaders to understand the renewable energy business;
• Promoting renewable energy demonstration schemes.