Banks To Fund Your Rooftop Power Plant – Financial Chronicle – 27-Nov-2014
November 29, 2014 - Uncategorized
The government proposes innovative debt scheme for renewable energy sector by allowing funding of rooftop solar (photovoltaic) panels as part of overall housing loan taken by households. The move is being contemplated to boost the use of solar energy across the country, with the government having set an ambitious target of reaching 100,000mw of capacity of solar energy in five years at an estimated investment of over Rs 8,00,000 crore.
Government officials in know said that the proposal is being discussed in the renewable energy ministry and would be soon put up for the finance ministry’s approval. The government would push for changes in the end use terms of a housing loan by the Reserve Bank of India (RBI) allowing rooftop solar plants to access long-term loan at competitive rates from banks and financial institutions.
The Indian Banks’ Association (IBA) is also discussing the issue with member banks to facilitate the renewable energy sector and explore possibilities of extending cheaper loans for solar power projects.
As per the plan, banks would offer home loans with provision of additional disbursement if individual customers want to install rooftop solar power panels. This would be an incentive for customers as the smallest 1kw rooftop power plant might cost anywhere between Rs 75,000 and 1 lakh; the investment could be much higher for a larger plant of 5kw –10kw. With loan repayment period extending between 20 and 25 years, such investment could be easily bundled with overall cost of a house.
“While the move for including funding of rooftop solar panel under overall housing loan is welcome, the exercise should be more focused on designing housing complexes that provide sufficient space for putting solar power panels,” said Tata Power Delhi Distribution Ltd (TPDDL) CEO and executive director Praveer Sinha.
TPDDL is itself running an initiative supporting customers in its distribution area in Delhi to put up solar power panels and is also facilitating funding of such projects.
A 1kw of solar PV installation roughly generates four-five units a day. Such installations take up roof space of about 8-10 square metres. For a 10kw plant, roughly 40 sq mt is required. While finding large spaces for these panels would not be easy, the long-term benefits of getting power virtually for free after initial investment would be a big motivation. Besides, with government regulation allowing roof top solar panels to sell surplus power to the grid by using bi-directional metres, these projects could actually become money-spinners for consumers.
The government is giving big focus to the development of solar power projects in the country, as these have now become feasible with tariff reaching closer to grid parity at Rs 7-8 per unit. Besides, the per MW investment in these projects has also fallen from Rs 12-14 crore for 1mw to almost Rs 7-8 crore now. Besides, the country is endowed with sunlight throughout the year, a key component necessary for running these projects.
Coal, power and renewable energy minister Piyush Goyal has recently said that country would add 1,00,000mw of solar capacity in record time by 2019, up from present capacity of mere 2,900mw. The present capacity is insignificant considering that country’s total installed power capacity is 2,54,000mw now.