India’s Rooftop Solar Badly Needs Financing Solutions

In Clean Facts, News, Renewable Energy, Solar

Four years ago, 40 GW was set as a target for rooftop solar. But so far, only 2 GW of rooftop solar has been installed as of Q1 2018.

Most rooftop installations are coming primarily from government and commercial and industrial sectors. Residential rooftop market is almost negligible. Other than a lack of policy support, one of the primary reasons for the sluggish growth is the lack of viable financing options for residential customers.

High upfront costs of a rooftop solar system is the biggest deterrent. Delays in subsidy disbursement are further hampering the growth of residential rooftop solar in India.

Many rooftop solar installers are not keen to take up residential projects as securing project finance has become increasingly difficult due to delayed or non-payment of subsidies.

All the subsidies are disbursed through the Solar Energy Corporation of India (SECI) and state nodal agencies. These agencies float tenders and ask for earnest money deposit (EMD). It is very difficult for a small installer to furnish EMD. This has led to a virtual halt in the entire program.

For small installers, say in the range of 5-10 kW, banks are not willing to extend financing. Banks also don’t hyphenate rooftop solar in the home loans, thus it attracts high commercial interest rates. Residential customers don’t want to give up their house or land as collaterals to banks for small rooftop-solar installations so the market needs to innovate when it comes to financial instruments that are customized for the Indian market conditions.

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