Solar Power generation projects are huge capital-intensive long-term environment friendly projects and implemented across the world in accordance with International Solar Alliance (ISA). ISA is an alliance of more than 120 countries, sitting together as signatory for green energy generation. The primary objective of the alliance is to work for the efficient consumption of solar energy to reduce dependence on fossil fuels. The alliance is a treaty-based inter-governmental organization across solar zone Countries. The alliance partnered with World Bank at the World Future Energy Summit in Abu Dhabi.
India, with the support of France, invited multiple nations, such as the United States, Japan and Brazil, to facilitate the infrastructure for the implementation of solar projects. During year 2016, the alliance entered into an understanding with the World Bank for accelerating mobilization of finance for solar energy. The Bank will have a major role in mobilizing more than US$1 trillion in investments that will be needed by 2030, to meet ISA’s goals for the massive deployment of affordable solar energy. As of year 2023, the Framework Agreement of the ISA was signed by multiple countries, the government of India announced the establishment of a $350 million solar development fund to enable the financing of solar projects.
The world bank has understanding with Government of India nodal agency Solar Energy Corporation of India– SECI, for loans and grants worth USD $200 million to invest in renewable energy innovative technologies and accelerate the country’s installation to meet 500gw renewable till year 2030. This agreement includes a USD $150 million IBRD Loan, USD $ 28 million CTF (Clean Technology Fund) loan and approximately USD $ 22 million for CTF grant. The loan from IBRD has a 5 years grace period and a maturity of 25 years. The loan from CTF has a 10 years grace period, and a maturity of 40 years and CTF facility is an interest free grant for renewables. During first quarter of FY 23-24 World Bank has approved USD $ 165 million to directly funding of 450mw residential rooftop solar installations for better adoption of residential / commercial rooftops for bringing grid parity to retail consumers.
Western India is having abundant land banks and most favourable solar climate for installation of mega scale solar power generation parks, if funding to these solar parks provided at internationally competitive interest rate. Solar is huge capital-intensive project and major cost of generation of power is the interest cost. Indian institutional route funding and banking project funding route is still costlier than most of the European, American and Japanese renewable energy funding rate. With immense potential of development of allied industries, generation of employment, savings from ground water evaporation, environmental benefits, green assets wealth management by solar developers are some big non-monetary benefits to a developing country like India. Government must consider these non-monetary factors to provide more leverage on lower basis points for relaxed funding for solar projects.
Nodal financial agencies are committed to provide accelerate funding for solar project, wherein datasheet is extremely attracting global solar equipment players to invest more in India. By submitting proposals to MNRE/SECI till year 2022 November, a capacity of 39,285 MW has been sanctioned and approved projects are at various stages of implementation in 13 states in India. To accelerate more on solarisation in least developed countries, here is an urgent need to tackle the lack of affordable funding to setup solar projects.
Since ISA is dedicated to address the urgent support for affordable financing and technical expertise in ISA member countries, government of India shall represent strongly for boosting local solar developers. At present solar projects in India are not considered as preferred funding projects on lower rate of interest, rather they need to fulfil normal project funding criterions and to avail funding at normal rate of interest from banks & institutions. India is naturally having most suitable environment to be the biggest solar power generation country in the world, just by addressing preferred funding to solar projects with add on incentives like Viability Gap Funding.
