A definite interest is there with many building owners for the roof top solar projects as the prices have come down for the solar panels. The performance of the solar panels have been quite satisfactory across India under various weather conditions to give the confidence to the building owners that the solar technology is there to stay for long times to come.
Now there is a requirement of getting a number of institutional arrangements in place that can potentially help this market to grow. The most important one is related to making the Bank Finance or the Loan facility available to the Roof owners who are willing to install the solar capacity.
In a meeting held by MNRE with the group of Banks earlier in the year, the Banks showed interest in funding the solar roof top projects. However, the Banks requested MNRE to provide clear guidelines, technical details, standards, manuals for rooftop solar PV projects, checklists etc. They expressed their reluctance to mortgage solar systems alone as a security instrument to provide loans. The Banks also wish to have Power Purchase Agreement, Land Ownership and assets of the rooftop solar PV projects as collateral while providing the loans. The Banks also agreed in the meeting to issue circular to their Branches to provide loans to the roof top solar projects.
In a number of Banks (for example State Bank of India) we have surveyed, the instructions to provide the loans for roof top solar projects have already reached at the retail Branches. However, there are still a number of Banks (for example HDFC Bank) where we found that the officers are not aware of any circulars to support roof top solar projects.
Even the Bank branches that have such circulars to fund these projects do not have the clear guidelines to evaluate these projects before the approval of loans. MNRE guidelines on the project evaluation are pending to be issued to the Banks. A SBI branch was ready to fund the roof top solar project but wished to have the entire House as the collateral which was not acceptable to the owner. To sum up, we found that the bank loan is not happening at all for the roof top projects unless there is a corporate guarantee which is possible only for the companies.
We understand that there are discussions going on with the Banks to designate at least one branch which would provide the Bank loans to the roof top solar projects. In fact there is a requirement of taking many such proactive steps to enable the bank finance.
The NBFCs also have to play an important role in providing the Bank finance. They have helped to open up the other markets like car financing through innovative products and schemes. They seem to be more open for new ideas and businesses. The roof top solar opportunity is very huge and provide very secure assets, as such the NBFCs should consider project financing these solutions.