India’s solar ambitions have received a major boost with the World Bank approving a US $625 million loan to support the installation of rooftop solar power systems across the country.
The Government of India’s National Solar Mission has set a goal of installing 100 GW of solar capacity by 2022, 40 GW of which is designated for rooftop solar.
The World Bank loan is aimed at financing at least 400 MW of new Grid Connected Rooftop Solar Photovoltaic (GRPV), buttressed by a co-financing loan of US $120 million and a US $5 million grant from the Climate Investment Fund, to help the Indian market overcome teething problems which have hampered uptake in rooftop solar.
Despite an estimated potential of 124,000 MW, rooftop solar in India has been sadly neglected in favour of larger scale solar plants. Energy consultancy firm Bridge to India’s latest Solar Handbook (PDF) says the 40 GW target for 2022 seems “a very remote prospect” without more focused policy support and an effective net metering program from government.
India remains a heavy coal-consuming nation, but is one of the lowest per capita consumers of energy on the world; with over 200 million people living off-grid. According to the World Bank, power shortages force manufacturers and industrial users to rely on expensive and polluting diesel-based back-up power supplies.
“India is endowed with huge solar energy potential, and the World Bank is strongly supportive of the government’s plans to harness this potential and increase India’s solar PV capacity to 100 GW,” said Onno Ruhl, World Bank Country Director in India.
“This project will support this target, by providing financing to some of the 40 GW of solar PV which will be placed on rooftops.”
In January this year, as the country announced it had reached an overall solar capacity of 5.6 percent, the Indian Cabinet Committee on Economic Affairs increased the budget for GRPV programs by more than 8-fold, in an effort to install 4200 MW of rooftop solar power systems throughout the country out to 2019-20.
The World Bank project will be implemented by the State Bank of India (SBI), and will support a range of rooftop solar options; including commercial and industrial PV systems. With many citizens unable to afford upfront ownership of systems, the SBI Rooftop PV Program will include third-party ownership, leasing, rooftop rental, as well as direct end-user ownership.
“Today, the only available option for those who want to install solar PV is to pay the entire cost up-front. The variety of financing mechanisms on offer under this program will represent a major innovation for the rooftop market,” said Mohua Mukherjee, Senior Energy Specialist and World Bank’s Task Team Leader for the project.
“Most importantly, the scope of the project will go beyond simply making finance available, it will also improve the investment climate for solar PV, and increase the `Ease of Doing Rooftop Business”.