The World Bank plans to introduce a $100-million credit guarantee scheme to boost India’s rooftop solar program, which has not gained enough traction. The scheme will allow micro, small, and medium enterprises (MSMEs) to avail concessional debt financing for setting up rooftop solar units, said two people aware of the development requesting anonymity.
The World Bank scheme, along with the State Bank of India (SBI) and the MSME ministry to accelerate the adoption of rooftop solar units, will help MSMEs access credit of around $1 billion. The arrangement will be beneficial for the firms that often do not meet the lending criteria of banks and other financial institutions, with their financial woes been exacerbated by the covid-19 pandemic.
This assumes significance given that India added around 4 gigawatts (GW) of rooftop solar capacity out of its 40GW target by 2022. Rooftop solar installations are part of India’s renewable energy target of 175GW to help reduce its carbon footprint by 33-35 per cent from the 2005 levels, as part of global climate change transition commitments adopted by 195 countries in Paris in 2015.
“The World Bank is collaborating with SBI to implement a $648 million financing and technical assistance program for solar rooftops. Through the program, concessional debt financing is provided for commercial and industrial consumers including MSMEs,” a World Bank spokesperson said in an emailed response.
The World Bank has been associated with India’s green economy finance and in 2016 had launched a $625 million lending program with SBI for rooftop solar units for the commercial, industrial, and institutional sectors. The loans helped develop India’s commercial and industrial solar segment. However, while the segment has been able to tap financing, small firms have been unable to do so to the desired level. “The program includes a $10 million first loss mechanism for MSMEs, which has been instrumental in kick-starting the rooftop solar market for MSMEs in India,” the spokesperson said.
Queries emailed to the spokespersons of SBI and the MSME ministry on Sunday remained unanswered.
Green finance will be among the priority themes at the 26th session of the Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change later this year in Glasgow. An investment of Rs 4.7 trillion has been made in India’s renewable energy space in the last six years, with an expected Rs 1 trillion investment opportunity annually till 2030.