Improving Access to Modern Energy Services in Underserved Communities
USAID’s Renewable Energy Microfinance and Microenterprise Program (REMMP) expands the availability of consumer financing for clean energy services and products, securing access to technologies that can improve the livelihoods and quality of life of low-income populations while at the same time helping USAID partners to reduce carbon emissions. REMMP focuses on household and community-scale renewable technologies for communities with low electrification rates, partnering with companies that manufacture and sell these products as well as with institutions that finance small-scale renewables.
Most of the renewable energy enterprises in the developing world remain limited in scale due to lack of end-user finance and challenges with distribution. REMMP is built on the premise that solutions that scale-up successfully share important attributes: an understanding of the interrelationship between finance, distribution, and technology; a tailored approach that takes account of market conditions and constraints; and the leveraging of existing financing and distribution channels for easier and quicker growth. All REMMP activities incorporate these elements to ensure the program achieves its objectives. Through REMMP, Arc Finance is:
Demonstrating the commercial viability of a range of consumer payment models
- Remittances: Financing for energy product is provided by family members in the diaspora via cross-border money transfers.
- Pay-As-You-Go: Financing is provided through a metering system that allows the end-user to pay for energy use in small increments.
- Crowd-funding: Pooled funds are provided by individuals via the Internet to support specific projects or organizations.
- Microfinance: Microfinance institution (MFI), bank or credit cooperative provides energy-related financial products to low-income consumers.
- Mobile Phone Networks: Bill payment/financing for clean energy is provided directly via mobile phone.
Facilitating investment for clean energy financing
Arc Finance provides the following services to project partners:
- Technical Assistance (for both MFIs and energy companies), with a primary focus on business model and product development, facilitation of public sector partnerships and investor engagement.
- Catalytic Grants that target specific, project-critical capacity and capital requirements that are necessary to advance core project objectives. These grants are tailored to the specific needs of the partner.
Improving the capacity of the private sector to finance clean energy
Arc monitors, documents, and promotes key lessons and best practices through an array of knowledge products with the aim of cultivating interest in rural energy finance among a broader audience of practitioners, investors and donors. Through presentations such as Arc’s recent Innovations in Financing conference in New York and participation in the Microcredit Summit in Manila, REMMP helps Arc make available expertise and information on the latest developments in these quickly growing fields. Additional resources are available on our website.
Arc Finance has established partnerships with several key organizations with specialized technical and local expertise to carry out the goals of REMMP.
REMMP Partners in India
Bandhan Konnagar is a not-for-profit society that is part of Bandhan Financial Services Ltd. (BFSL), the largest MFI in India, which provides microfinance services to 4.8 million rural women through 1,864 branches across 19 Indian states. Arc is supporting Bandhan to develop and launch a new multi-state, energy-focused subsidiary, providing both sales and credit for end-clients.
Milaap.org (Milaap) is a company that supports the growth of non-traditional microcredit products such as energy, water, sanitation, and education loans by providing inexpensive, flexible capital to Indian MFIs through the crowdsourcing of funds. Arc Finance is partnering with Milaap to establish a low-cost revolving credit facility for MFIs engaged in energy lending in order stimulate MFI interest in the sector and reduce borrowing costs of MFI customers. Arc is also providing technical assistance to Milaap’s MFI sub-partners to finance a range of energy services including solar, clean cook-stoves and microgrids.
Simpa Networks is an energy company that markets high quality solar home systems (SHS) that are sold on a “progressive purchase” basis. Progressive purchase enables off-grid consumers to pay for solar service in flexible increments over time in a manner similar to the pay-as-you-go model adopted by the mobile telecom industry. Arc is partnering with Simpa to test its B2C pay-as-you-go business model.
Indian Grameen Services (IGS) is a not-for-profit company that serves as the action research, pilot testing and incubation arm of the BASIX Group, one of India’s largest financial and business development institutions focused on the poor. Arc is partnering with IGS to launch Urja Samruddhi, which will market, sell and finance energy products for low-income consumers in rural communities by training and supporting a network of village-based solar retailer-technicians.
Friends of Women’s World Banking-India (FWWB-I) is an apex organization that provides loan support and program development assistance to a network that currently includes 25 microfinance and community-based organizations located throughout India. Arc Finance is partnering with FWWB-I to create and grow a revolving credit facility for clean energy. Arc is also providing technical assistance to FWWB-I’s MFI sub-partners to finance a range of energy services.
REMMP Partners in Uganda
SolarNow is a Uganda-based, private, solar distribution and service company that offers credit to customers on a hire purchase basis, enabling them to purchase solar home systems in monthly installments via an in-house “payplan.” Under REMMP, Arc will help SolarNow attract financing to test the payplan model, scale operations and expand to other countries in sub-Saharan Africa on a sustainable, long-term basis.
REMMP Partners in Haiti
Sogexpress, a Sogebank Group subsidiary, specializes in transfer payments. Arc is partnering with Sogexpress to ensure the success of its remittances project, which allows Haitians in the Diaspora to directly provide solar products to their families in Haiti in lieu of cash transfers. As only 12.5% of Haitians are electricity customers, Sogexpress and Arc are pioneering access to solar energy through this platform.