- The difficult situation of Sun Edison has made Indian banks wary of financing solar projects by foreign companies
- In addition, record low tariffs have industry experts worried about the financial viability of solar projects in India
- Over $1 billion have been sanctioned for renewable energy projects in India since February last year
Indian banks are getting cautious in lending to foreign companies planning to set up solar power projects in the country, according to a Bloomberg report. While highly indebted US based renewable energy company SunEdison Inc. is reportedly fighting for survival, Indian banks are said to become wary of putting their money into country’s solar sector, where SunEdison had been very active.
Though India is being hailed as the new solar growth story globally with its massive target of 100 GW of installed solar power capacity by 2022, Indian industry experts are worried about the projects being viable at all. Record low tariffs have been quoted and won in tenders, the last lowest tariff being 4.34 INR per kW ($0.07) for a 70 MW solar project in the state of Rajasthan. However, Bloomberg quoted PriceWaterhouseCoopers India partner Kameswara Rao who said that banks may impose stricter terms for solar finance from now on. “This may reflect in higher tariffs eventually,” he said.
India says over $1 billion have been sanctioned for renewable energy projects in India since February 2015 (see article Renewables Investments in India).
There were recent reports that SunEdison was looking to sell its projects in India, a total of over 1 GW in capacity, with Adani, Foxconn and SoftBank also showing interest in the same. In early April, SunEdison was sued by its own subsidiary TerraForm Global, which blamed the parent company for keeping it in the dark about the latter’s money, amounting to $231 million, not being spent on finishing India projects as planned.