Objectives
As is widely accepted, several barriers impede private investment in the commercialization of RETs and in the development of commercially viable Small and Medium Enterprises (SMEs) that harness these technologies. The major barriers include: limited financing to defray high up-front costs associated with developing renewable energy projects; entrepreneurs’ unfamiliarity concerning the structuring of commercially viable businesses; tough competition from subsidized conventional energy sources that lower the market price for electric and thermal power; and high market penetration costs. It is well acknowledged that there is certain reluctance among the financial institutions to finance RET projects. Lack of knowledge with regards to the technology, the establishment of commercial chains and importantly the risks associated with such enterprises are some of the factors that discourage financial institutions from coming forward. The establishment of the Risk Guarantee Fund by WII is meant to address these problems squarely.

Objective
The purpose of setting up the Risk Guarantee Fund (RGF) was to provide an impetus to commercial lending for RE based enterprises/projects through part coverage of business and financial risks that could potentially be borne by entrepreneurs and lending institutions involved in such enterprises/projects. The project was intended to increase the comfort level of the lending institutions so that they are encouraged to carryout lending operations in these areas. Presently the loan activities under this project was limited to the state of Andhra Pradesh.

Activities
As a first step towards management of the fund, WII had set up an independent and credible `Risk Guarantee Fund steering Committee’ with the purpose and mandate of overseeing the management of the fund, including taking decisions on granting portfolio loan guarantees to individual MFIs. The committee also veted the operational procedure of the fund, in particular the conditions to provide for its financial sustainability. An elaborate set of criteria for selecting project proposals was developed and approved by the Steering Committee. Once a selection was made (as per the operational procedures and selection criteria-as highlighted above), the project team worked with the selected entrepreneur(s), providing enterprise assistance services that would help in designing, building and operating the RET project in an efficient manner. The project team performed due diligence checks typically applied by commercial lending institutions in such a way that the process of loan approval does not become complex for small borrowers, while at the same time retaining the integrity of the due diligence process. After this, the project team was leverage the RGF as a negotiating tool to ensure that the commercial lending transaction is successfully concluded. The exact cover was worked out on a case-to-case basis. Simultaneously, awareness generation of financial institutions through workshops on RETs was conducted. These workshops would showcase the experiences of the past and current projects, their successes, and difficulties faced.

Achievements
WII had short listed two business plans for implementation. In the first one, a local entrepreneur was supported to enhance his current business by producing distilled water through Solar Stills. All the operational procedures was carried out and the equipment was installed at the project site. In the second case, a rural entrepreneur owning a saw mill was identified who used waste wood matter generated in his mill for generating electricity to his mill. WII carried out due diligence for this plan.

WII entered into an MoU with S3IDF, a social merchant bank that helps small enterprises to provide modern energy and other infrastructural services specifically to poor people in developing countries in ways that are financially sustainable and environmentally friendly, by which the latter extended partial financial support to individual businesses and also helped WII in leveraging funds from mainstream financial institutions.