LED street lights have been installed in the area around Hyderabad's famous Necklace Road, a scenic boulevard in the heart of the city that curves around the Hussain Sagar Lake. Credit: Stella Paul/IPS
HYDERABAD, India, May 28 2026 (IPS) - Ahead of the Eighth Global Environment Facility (GEF) Assembly in Samarkand, governments and development institutions are grappling with a familiar challenge: How to finance environmental action at the scale required to meet rapidly growing needs.
As public budgets tighten and biodiversity and climate risks intensify, attention is increasingly turning to blended finance – an approach that combines concessional public funding with commercial investment to mobilise large-scale capital. Related IPS Articles Guardians of the Sea: How GEF Small Grants Program Enables Young Volunteers Take the Lead in Sea Turtle Conservation Explainer: How the GEF Funds Global Environmental Action Brazil’s Indigenous Communities Receive $9M in GEF Funding to Protect Lands, Traditions Under Threat
Supporters say this model can reduce investment risks and unlock private capital for projects that might otherwise struggle to secure funding. Critics caution that such approaches still depend heavily on public support and may not be easily replicable everywhere.
In Hyderabad, India, one of the world’s largest municipal LED streetlighting programs has emerged as a prominent example of how blended finance can work in practice.
Hyderabad, a rapidly expanding and climate-vulnerable metropolis, has sought to address rising temperatures and growing energy demand by retrofitting its street lighting system with energy-efficient LEDs under India’s Street Lighting National Programme (SLNP). The initiative was part of a broader programme – Creating and Sustaining Markets for Energy Efficiency – implemented by Energy Efficiency Services Limited (EESL) in partnership with the United Nations Environment Programme (UNEP) and the Asian Development Bank (ADB), with support from the GEF.
The program combined GEF grant funding with more than USD 434 million in co-financing to deploy energy-efficient technologies at scale.
“The environmental financing gap runs into hundreds of billions of dollars annually. This is a scale that grants and ODA alone cannot close,” said Fred Boltz, Head of Programming at the GEF.
“Mobilising private capital is essential to sustaining a healthy planet.”
Blended finance works by reducing risks for private investors – through concessional loans, guarantees, or grant support – making projects viable in markets where returns are uncertain. By absorbing part of the risk, public or philanthropic funding enables commercial investors to participate in sectors such as renewable energy, biodiversity, and sustainable infrastructure, which are often perceived as too risky.
In Hyderabad, EESL financed the installation of LED streetlights and recovered costs through future energy savings, eliminating the need for large upfront spending by the Greater Hyderabad Municipal Corporation (GHMC).
More than 450,000 streetlights were replaced during the initial phases, with further expansion extending coverage across the city. Electricity consumption linked to public lighting dropped by roughly half, generating annual savings of more than ₹1 billion (about USD 12 million) while significantly reducing carbon emissions.
The financing structure relied on a “deemed savings” model. Instead of paying upfront, municipal authorities repaid investments over time using verified reductions in electricity and maintenance costs.
Supporters say such arrangements help cities modernise infrastructure, despite budget constraints. But analysts warn that they depend on accurate projections, reliable maintenance, and strong institutional capacity.
Experts agree that blended finance works best when public institutions remain actively involved in implementation and oversight.
In Hyderabad, the programme incorporated a Centralised Monitoring and Control System (CCMS), allowing authorities to track electricity use, detect faults, and monitor performance in real time.
The system improved operational oversight while generating the data needed for performance-linked financing – where payments are tied to independently verified outcomes.
Newly retrofitted LED street lights on the eastern edge of Hyderabad, in India. LED lights are a cost- and energy-efficient alternative to other lighting and bring a sense of security to the areas where they are installed. Credit: Stella Paul/IPS
For residents, the effects of the LED transition are often experienced less in financial or technical terms than in everyday routines and perceptions of safety.
Kavitha Ramavath (27) and her husband, Ravi Ramavath (35), recently moved with their two young children to Uppal Bhagath, a fast-growing neighbourhood on the eastern edge of Hyderabad. They previously lived in Uppal Kalan, about four kilometres away, where housing was cheaper, but the infrastructure was poor. Kavitha works as a domestic worker, while Ravi drives an auto-rickshaw.
