Financing has been identified as the key barrier towards accelerating solar rooftop deployment. Towards easing the burden of high cost funds, the Government on 8th July, 2015 launched a Scheme of Indian Renewable Energy Development Agency (IREDA) for providing loans @ 9.90 – 10.75% for solar rooftop projects with a repayment period of 9 years and moratorium of 1 year. Loans can be provided upto 70 - 75 % of project cost and can be availed under Aggregator category or Direct category for a minimum aggregated capacity of 1 MW with minimum sub-project size of 20 KW. Interest rates are linked to credit rating of borrowers. The Scheme is backed by credit lines from KfW and JICA. The Financial & Operational Guidelines of the Scheme which is open to Industrial, Commercial & Institutional projects have been released by IREDA.
IREDA has pioneered and has so far been lending to large multi-megawatt utility scale renewable energy projects for which it has considerable experience. Lending to distributed or decentralized projects is a relatively new domain. The project/loan size will generally be smaller and gestation will be shorter. New documentation and processing/appraisal procedures will be necessary. The conditionalities and security requirements including collateral/bank guarantees may need to be evolved afresh and simplified to minimize overall loan processing and approval period. Leadership of IREDA will be vital to pave the way for lending to rooftop projects by other financial institutions and commercial banks.
Government has also sought funds to the tune of 2 billion dollars from World Bank and ADB to provide cheaper loans by banks through interest subvention for solar rooftop projects. RBI has issued instructions placing renewable energy including solar power projects under priority sector lending by banks. Ministry of Finance has advised Public Sector Banks to include solar rooftop projects under concessional loans for housing/home improvement.