Dedicated financing support key to scale up rooftop solar in SME sector in India has been saved
Dedicated financing support key to scale up rooftop solar in SME sector in India
The MSME sector is expected to contribute significantly to achieving the Government’s target of developing 40 gigawatt (GW) of rooftop solar capacity by 2022. Scaling up rooftop solar in MSME sector in India requires addressing issues related to lack of low cost financing, inadequate level of awareness and lack of rooftop aggregation models, according to a new report from the Climate Investment Funds (CIF) and Deloitte Touche Tohmatsu India LLP.
The report “Scaling up rooftop solar in SME sector in India” evaluates key issues based on the primary survey done across 150 MSMEs in six industrial clusters (rubber and plastic; pharmaceuticals; auto; paper; food and beverage; textiles) in India, selected on the basis of a pre-determined criteria, and recommends possible solutions for triggering rooftop solar growth in MSME sector in India.
“Limited access to finance, need to strengthen awareness and escalating energy expenses are impacting the long-term profitability, competitiveness, and sustainability of the sector. However, it presents great opportunity, and a multi-pronged approach involving supportive regulations, risk-bearing financing, and awareness building are needed to demonstrate viability and help scale up rooftop solar in the sector.” says Abhishek Bhaskar, Energy Specialist (CIF).
“A well-conceived walk through survey of 150 MSME units spread across six different clusters across India depicted the willingness towards adoption of rooftop solar applications but strengthening an enabling ecosystem shall be critical for for its proliferation” says Tushar Sud, Partner (Deloitte Touche Tohmatsu India LLP).
The report highlights possible solutions for addressing the key barriers impacting rooftop solar growth in MSME sector and some them are:
- In the initial stages target clusters where likelihood of achieving intended outcomes highest higher and developing customized market plans is imperative.
- Indian rooftop solar market is currently not geared to implement large-scale rooftop solar projects under the OPEX model in the MSME sector without institutional or financial interventions. A dedicated aggregation vehicle would support implementation of rooftop solar projects across target MSME clusters
- Regulatory changes for adoption of group and virtual net metering could assist in implementing aggregation models in the MSME clusters and overcoming issues related to scale, diverse customer profile, and financing to a large extent.
- Supporting dedicated MSME based portfolios within existing/new lines of concessional credit shall support development rooftop solar projects in MSME sector.
- Dedicated scheme supported by Ministry of MSMEs with financial interventions like interest subvention and the Partial Risk Guarantee Fund mechanism through budgetary allocations required for initial pilot projects across target clusters.
- Creating awareness and capacity building through dedicated initiatives to bridge knowledge gaps support the support adoption of rooftop solar in MSME sector.
“World Bank has long supported India’s renewable energy ambitions, incl. rooftop solar, which is an integral part of our clean energy strategy. Supported by the Clean Technology Fund (CTF), the program has delivered financing to close to 300 MW so far working in close partnership with SBI, and is all poised to surpass its initial goals. This CTF supported work is quite timely since a significant amount of this financing goes to installations for SMEs, a sector that we have also identified as one of the potential areas for future growth” says Simon Stolp, Lead Energy Specialist, The World Bank.
The Climate Investment Funds (CIF) accelerates climate action by empowering transformations in clean technology, energy access, climate resilience, and sustainable forests in 72 developing and middle-income countries. As part of CIF, the $5.5 billion Clean Technology Fund (CTF) is empowering transformation in developing countries by providing resources to scale up low carbon technologies with significant potential for long-term greenhouse gas emissions savings.
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