World Bank Loan To India

$625 Million To Support India’s Rooftop Solar PV Program And Install At Least 400 MW
10:23 AM (Beijing Time) - 19. May 2016
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At the end of fiscal year 2015-16, India’s rooftop solar capacity stood at 740 MW. While the Indian Government is targeting 40 GW rooftop PV by 2022, the Solar Rooftop Policy Coalition thinks that only about one third of that number will be added during that time. However, the World Bank pegs the overall potential demand for rooftop solar at over 3X India’s 2022 target.

Key Takeaways

  • The World Bank will lend the money to the State Bank of India which will be the implementing agency for the project
  • Along with $625 million, the World Bank Board will also co-finance a $120 million loan based on concessional terms and a $5 million grant from the Climate Investment Fund’s (CIF) Clean Technology Fund
  • Under India’s SBI rooftop PV program, investors will have the options of third-party ownership, leasing, rooftop rental and direct end-user ownership
  • The money will be lent to solar PV developers/aggregators and end-users who wish to invest in mainly commercial and industrial rooftop PV systems

he World Bank will lend India $625 million for its rooftop solar PV program. The flow of funds will be directed at installing at least 400 MW of grid connected rooftop PV (GRPV) across India. It is expected to strengthen the capacity of key institutions, and support the development of the overall PV market in the country.

World Bank Country Director in India, Onno Ruhl, said, “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. This project will support this target, by providing financing to some of the 40 GW of solar PV which will be placed on rooftops.”

The World Bank Board will also co-finance a $120 million concessional loan and a $5 million grant from Climate Investment Fund’s (CIF) Clean Technology Fund. The World Bank said that the International Bank for Reconstruction and Development (IBRD)-CIF loan will support a number of solar PV business models, to expand the reach of rooftop PV systems to a variety of customer group, including those who can afford to develop and own their rooftop systems as well as low-income groups that will opt for a pay-to-use model.

The Indian rooftop PV segment suffers from lack of adequate financing, unfamiliar technology and low awareness about the solar subject. Paying full cost up front has kept many away from investing in solar power.

“Today, the only available option for those who want to install solar PV is to pay the entire cost up-front,” said Mohua Mukherjee, Senior Energy Specialist and the World Bank’s Task Team Leader for the project. Adding, “ The variety of financing mechanisms on offer under this program will represent a major innovation for the rooftop market. 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’.”

The implementing agency for the project in India will be the State Bank of India (SBI), which will lend this money to solar PV developers/aggregators and end-users who wish to invest in commercial and industrial rooftop PV systems. Under the SBI rooftop PV program, investors will have the options of third-party ownership, leasing, rooftop rental and direct end-user ownership.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 19.5-year grace period and a maturity of 20 years. The loan from CIF’s Clean Technology Fund, have a 10-year grace period and a maturity of 40 years.

India is chasing a target of 100 GW of installed solar power capacity by 2022, out of which 40 GW is expected to come from rooftop installations. However, a March 2016 report by Solar Rooftop Policy Coalition stated that India will only be able to achieve 13.5 GW of solar capacity through rooftop installations. Clean energy consultancy Bridge to India forecasts the country to add just 6.8 GW of new rooftop solar capacity addition from 2016-2020 (see India Solar Handbook 2016).

As of March 31, 2016, India’s rooftop solar capacity stood at 740 MW. According to the World Bank, the overall potential demand for rooftop solar is estimated at about 124,000 MW.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani