High interest rate is one of the major impediments in the development of solar sector in India
The Indian Renewable Energy Development Agency (IREDA) recently launched a loan scheme for Rooftop Solar Photo Voltaic Power Projects.
The scheme intends to provide loans at an applicable interest rate of 9.9 to 10.75 per cent to system aggregators and developers, depending on the credit rating of the borrower. In India, the commercial lending rate for solar projects is usually 12-13 per cent and is considered as one of the highest in the world.
The minimum capacity for the application would be 1 MWp (MegaWattpeak) for both categories of aggregators and individual developers, with individual projects (in case of aggregators) of capacity not less than 20 KWp (KiloWattpeak). Given the fact that most rooftop projects for individual households would be less than 5 KWp, the scheme is not meant for the general public interested in putting up rooftop solar at their homes.
The Centre has set a target of achieving 100 GW (GigaWatt) of solar power till 2022, out of which, 40 GW is planned to be achieved from rooftop solar. Earlier this month, the Ministry of New and Renewable Energy released state-wise and year-wise proposed targets for the 40 GW.
"The government of India is soliciting ideas and constructive criticism on all renewable power projects and no amount of negative response can deter the ministry from its dream of achieving this target," said Piyush Goyal, Minister of State for Power, Coal, New & Renewable Energy at the event where IREDA launched the loan scheme.
New and Renewable Energy Secretary Upendra Tripathi claimed that the 40 GW (40,000 MW) rooftop target was “challenging” and said that “everyone should help”. He also added that the government is trying to get $2 billion from the World Bank and Asian Development Bank, which can be passed on to banks for financing projects on soft rates of interest. The International Finance Corporation (IFC), the private financing arm of the World Bank also signed an agreement to partner IREDA in providing infrastructure financing for energy projects in India.
"The partnership will help IREDA increase its portfolio to support the government's plans to establish up to 175 GW of renewable energy projects over the next seven years," said IREDA chairman and managing director K S Popli.
IREDA also signed a memorandum of understanding (MoU) with the US Ex-Im bank in November last year, covering the programme. The funding wasn’t finalised when the Ex-Im Bank’s charter expired on 30 June. “It was only an MoU so you may consider it over for all practical purposes as of now,” claims Popli.
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