Driving Renewable Energy Adoption Through End-User Financing
DD Solar provides solar-powered cooling solutions to small retailers, farmers, and micro-entrepreneurs. These appliances enable businesses to operate efficiently and sustainably, addressing challenges like unreliable electricity while promoting climate action. While these sustainable solutions have proven to increase income, small farmers and entrepreneurs struggled to afford them due to limited cash flow. Traditional banks hesitated to provide loans, citing uncertainties around repayment capacity and product performance.
This created a financing gap that hindered widespread adoption.
Villgro stepped in with innovative finance solutions to make these appliances accessible to
underserved communities. By facilitating end-user loans through a First Loss Default Guarantee (FLDG) mechanism, Villgro partnered with Ashv Finance to mitigate risks and unlock funding.
With support from SHELL, IKEA, and the DOEN Foundation, 25% of potential loan losses were covered, enabling Ashv Finance to launch a ₹1 crore loan facility.
The initiative saw transformative outcomes:
1. 362 loans distributed and 750 solar refrigeration units sold.
2. 44% of loans went to women beneficiaries, many of whom were first-time borrowers.
3. 10,000 tonnes of carbon emissions reduced, driving meaningful climate action.
The program’s success extended beyond numbers.
Strong repayment behavior, with a non-performing asset rate of just 6%, demonstrated the creditworthiness of these underserved customers. Encouraged by this, DD Solar scaled its operations and introduced new solutions like parametric insurance to protect farmers from climate events. Additionally, alternative revenue streams, such as monetizing environmental outcomes through carbon credits, are being explored.
The Way Forward
The program’s success convinced Ashv Finance to announce a second loan facility with a reduced FLDG requirement. This new phase introduces further affordability: WE4F will subsidize 36% of the product cost, allowing beneficiaries to finance the remaining 64% through loans at an 18% interest rate.
In Summation
Villgro remains dedicated to tackling climate change and fostering climate-resilient livelihoods
through innovative finance. By enabling social enterprises like DD Solar to scale, Villgro is driving systemic and sustainable change. Through a mix of incubation, market access, and financial innovation, Villgro amplifies the impact of solutions that address pressing social and environmental challenges, proving that climate action and income growth can go hand in hand.
