Announcing 3 exciting innovations to unleash clean energy in Nepal

Vendor finance is a tool to supply finance to customers by vendors to buy respective products. It is an alternative approach for asset ownership without incurring heavy banking costs. This approach is also known as 'sellers finance.'

In a nutshell, vendor finance packages financing tools with the sale of supplies/inventory. This makes asset ownership, such as solar systems, affordable for consumers who may not have been able to afford it before.

In the energy sector, examples of vendor finance include

  • Pay as you go financing (PAYG)
  • Solar water pumps funded by vendors
  • Solar conduction dryers funded by vendors

The use of vendor finance can unlock the capital needed to get renewable energy services where people need it most.

The United Nations Capital Development Fund (UNCDF) supported the Central Renewable Energy Fund (CREF) from the Government of Nepal's Alternative Energy Promotion Center to develop the vendor finance challenge fund. CREF together with UNCDF and Renewable Energy for Rural Livelihoods (RERL) programme of UNDP contributed to the fund.

Vendor Finance Challenge Fund in Nepal

The Vendor Finance Challenge Fund’s goal is to test, develop and scale up innovative business models for vendor finance in Nepal. This includes finding solutions that can use financing, data, or technology that promote sustainable use of renewable energy.

Through a competitive selection process, CREF selected 3 grantees to pilot innovative financing models in Nepal.

Project 1: Introduction of Innovative dehydration technology in Nepal and value addition in cash crops

Name of the Energy Company: Astha Engineering Solutions Private Limited, Kathmandu

Nepal loses an estimated 20-50% of vegetables and fruits in post-harvesting processes. Most subsistence farming communities do not have access to appropriate technologies. This project will provide easy access to advanced and new technologies like solar conduction dryers (SCDs) and BioSmart Dryers. SCD dries agri-products 40% faster than other solar based drying technologies at lower costs. This will allow producers and processors to link with national and international markets to sell dried products.

Astha Engineering will sell at least 350 solar conduction dryers and 10 BioSmart Dryers to farmers. They will also establish a training center and organize training programs for farmers.

Project 2: Use of innovative consumer financing technology to provide solar products in Nepal

Name of the energy Company: Jeevan Bikas (JBS) Urja, Biratnagar

There is tremendous potential for off-grid solutions in rural Nepal, where electricity is erratic at best. But, low income homes cannot afford the up-front costs for solar energy devices.

Adoption of solar systems requires technology that enables customers to overcome payment constraints. This is where PAYG technology becomes important and has a transformative track record in other countries.

JBS Urja will test PAYG consumer financing model and associated technologies for different solar energy systems. JBS Urja is a sister company of Jeevan Bikas Samaj, which was one of the initial partners of UNCDF CleanStart in Nepal.

This pilot project will develop PAYG with JBS Urja Solar Products. They will also develop an innovative system for technology-based customer and after sales support. As a result, more than 1,000 families in remote rural locations will have access to solar solutions.

Project 3: Off Grid Bazar

Name of the Company: Gham Power Private Limited

Stuck in traditional farming practices, farmers throughout Nepal struggle to increase revenue. A major issue is the lack of micro-level data on local farming practices. This lack of data also prohibits banks from lending to farmers as they cannot quantify investment risk.

To address this, Gham Power proposes a project development platform, Off Grid Bazaar. This platform will leverage existing farming datasets with their proprietary algorithms to help rural farmers improve their yield by selecting an optimal mix of crops and solar water pumping system.

The platform generates projected cash flow statements that banks can use to assess risk and lend funds to buy solar pumps. The solar water pump systems include their proprietary PAYG smart meters. This enables monthly bank payment collection using mobile money, which decreases collection costs and enables banks to offer better financing terms.

These meters also have sensors to track agriculture-related data like water usage, soil moisture, and weather. As a result, the platform can predict irrigation requirements using field-level data. This will lower costs for farmers while maximizing their revenue.

Over time, the data can show useful practices in farms and make suggestions based on previous crop cycles. This will result in higher yields, lower inputs and less environmental impact.

Under this project, Gham Power plans to sell 200 water pumping systems with smart meters. Mobile money will ease payments of the services.

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a copyright violation, please follow the DMCA section in the Terms of Use.