Access to Renewable Energy: Micro-Finance for Small Businesses and Micro-Enterprises in Pakistan

South Asia’s energy crisis is increasingly characterized by rising energy demands that remain unmet by the national energy supply, contributing to frequent power outages. Rising energy costs and power cuts pose high risks for low-income entrepreneurial productivity and livelihoods. Renewable energy technologies could improve energy access, responding to energy shortages, while also contributing to climate change mitigation by reducing reliance on energy sources that emit greenhouse gasses. This project aims to increase the uptake of renewable energy technologies among poor, rural entrepreneurs across 320 villages and 1,000 loan-takers. Researchers will analyze incentives and climate-insurance-like mechanisms, combining subsidies with incentives for early repayment according to the amount of sun exposure and energy produced by the renewable energy system. This seeks to reduce the likelihood of debt-induced poverty traps, while also improving satisfaction with the technologies. Finally, researchers will test spillover effects among another 2,200 entrepreneurs across the 320 villages using a lottery instrument.

Check out the pilot of this study that was previously been funded by the King Climate Action Initiative.