ABSTRACT
India has 63 million MSMEs, the second-highest number in the world after China. Constituting nearly 30% of India’s GDP and consuming energy at a rate comparable to 20–25% of that used by the country’s large industries, MSMEs play a crucial role in India’s journey towards achieving net-zero emissions.
Despite various financial initiatives for financing energy efficiency, MSMEs have generally fallen short in promoting widespread adoption of energy-efficient assets. Hence a tailored approach is needed to leverage what has worked in the past and weed out issues that impede widespread adoption.
This chapter will delve into the following aspects of financing energy efficiency by MSMEs: (a) assess the potential impact of energy efficiency on India’s energy transition, with a particular focus on the MSME sector; (b) analyse the current financing landscape for energy efficiency in MSMEs; (c) examine successful domestic case studies, such as the BEE’s cluster approach, SIDBI’s MSME EE financing scheme, and EESL’s UJALA Scheme; (d) discuss global examples, including on-bill financing, energy-saving insurance models, the PACE scheme in the USA, and initiatives like the EU’s open-source database and LAUNCH programme; (f) provide recommendations for enhancing existing schemes and developing new mechanisms and instruments to bolster MSME energy efficiency financing.
