adelphi assesses market potential for micro-financing of renewable energies in Asia

In a new project on behalf of the KfW Development Bank adelphi is assessing the potential for microfinance for small-scale renewable energy and energy efficient applications for low-income groups and small businesses in Bangladesh, Cambodia, India and Nepal.

In developing countries, social, economic and health benefits can be directly linked to the usage of clean energy. In this context, the advantages of micro financing of renewable and energy efficient products for low-income households and micro, small, and medium enterprises (MSMEs) have been largely recognised.

By providing loan financing on commercial terms to microfinance institutions (MFIs), the Microfinance Initiative for Asia (MIFA) Debt Fund focuses on sustainable, commercially viable MFIs providing financial services to the poor. As a public-private partnership it is funded by equity investments, as well as mezzanine and senior loans from government institutions – German Federal Ministry of Economic Cooperation and Development (BMZ), the European Union (EU), Kreditanstalt für Wiederaufbau (KfW), International Finance Corporation (IFC) as well as private investors.

New financial products and funds components for climate financing

The Junior Tranche of the MIFA Debt Fund is to be increased in order to promote renewable energy and energy efficiency investments by households and MSMEs by providing funding to financial intermediaries in South and East Asia.

Against this backdrop, adelphi was commissioned to develop a programme for a new component within the MIFA Debt Fund Junior Tranche. With this objective, adelphi assesses the market demand in the target countries. Supplementary to document reviews and stakeholder analyses, adelphi in cooperation with ArcFinance conducts a substantial number of interviews with experts from the different stakeholder groups in order to identify barriers, drivers and best practices. Based on these findings, adelphi develops detailed recommendations for individual financing products as well as for the overall programme concept and responsibilities. To this end, the project team assesses various business models, delivery channels and capacity building needs. Additionally, adelphi evaluates potential risks for the different regional contexts and technologies and develops a risk mitigation strategy accordingly.

adelphi is realising this project in collaboration with international and local experts and the partner organisations ArcFinance and Climate & Energy Solutions.