Multi-lateral lender Asian Development Bank (ADB) will extend a $500 million loan for installing solar rooftop systems to help India expand its renewable energy footprint.
“ADB is set to provide $500 million in financing for rooftop solar systems that will help the Indian government expand energy access using renewable energy,” it said in a statement.
The financing comprises $330 million from ADB and $170 million from the multi-donor Clean Technology Fund, administered by the funding agency.
“This funding should mean that 11 million fewer tonnes of greenhouse gases are emitted over the typical 25-year lifetime of solar rooftop systems,” ADB said.
The financing will be channalised through state-owned Punjab National Bank, which will use the ADB funds to tender loans to various developers and end-users across the country to set up solar rooftop systems.
“There is a huge potential for India to expand its use of solar rooftop technologies because of the sharp drop in the price of solar panels, meaning the cost of producing solar energy is at or close to that from fossil fuels,” said Anqian Huang, finance specialist in ADB’s South Asia Department.
Sourcing more solar energy will also help India meet the carbon emissions reduction target that it has committed to, as part of the recent global climate change agreement, Huang said.
Combined with an additional $300 million in subproject equity investment and $200 million in loans from commercial banks and other financiers, the entire cost of the Solar Rooftop Investment Programme is $1 billion.
The Government aims to increase the amount of energy sourced from solar rooftop systems to 40 gigawatts by 2022.
The fresh funding is to further the goal under Jawaharlal Nehru National Solar Mission to increase India’s overall solar energy generation to 100 gigawatts by 2022.
India has targeted to lower its carbon emissions by 33 per cent from 2005 levels so as to substitute it by non-fossil fuel based power under the 2015 Paris climate agreement.
Besides, ADB has also committed to double its annual financing for climate mitigation and adaption to $6 billion by 2020 to support India’s cause.
The solar rooftop market is still at an early stage of development in India and awareness of the latest technologies and the financial benefits is low.
Banks see lending to such projects as risky, partly because of limited past experiences.