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					</table>The Solar Energy Corporation of India (<a href="https://www.seci.co.in/" target="_blank" rel="noopener">SECI</a>) has invited bids from scheduled commercial banks or financial institutions for a term loan of ₹10 billion (~$120.24 million) to develop a 300 MW solar power project in the Ramagiri village of Sri Satya Sai District in Andhra Pradesh.
The loan must be on a single/multiple bank lending basis at a competitive rate of interest for 20 years, including a moratorium of two years. The minimum amount to be offered by the bank must be ₹2.5 billion (~$30.06 million) and in multiples of ₹2.5 billion (~$30.06 million) thereafter.
The approved loan must be disbursed within two years of signing the loan agreement.
The last date to submit the proposals is January 21, 2024.
SECI was awarded the contract to develop 1.2 GW solar projects by the Indian Renewable Energy Development Agency (<a href="https://www.ireda.in/home" target="_blank" rel="noopener">IREDA</a>) with a viability gap funding (VGF) of ₹4.47 million (~$53,748)/MW under the Central Public Sector Undertaking Program Phase-II.
Out of the total capacity, 300 MW was proposed to be developed in Ramagiri, Andhra Pradesh. SECI had <a href="https://www.mercomindia.com/seci-invites-bids-for-300-mw-in-andhra-pradesh" target="_blank" rel="noopener">floated</a> the tender for the designing, engineering, testing, and commissioning of this project in April this year.
The total project cost is estimated to be ₹14.19 billion (~$174.23 million), including interest during construction and subtracting the solar park subsidy from the Ministry of New and Renewable Energy. The capital expenditure for the project is proposed to be funded at a debt-equity ratio of 70:30, variable up to 75:25.
SECI plans to meet the equity from internal accruals/VGF to be received from IREDA and the debt requirement through term loans from banks.
The power generated from the project will be sold to the Madhya Pradesh Power Management Company at ₹2.57 (~$0.031)/kWh.
SECI has identified 907.87 acres of land for the project, out of which it has taken possession of 899.43 acres.
It has also received in-principle approval of connectivity for the 300 MW solar project at 220 kV level of Pavagada, 400/220 kV Central Transmission Utility Substation.
SECI recently <a href="https://www.mercomindia.com/seci-subsidy-october-2023" target="_blank" rel="noopener">paid</a> solar and wind power producers ₹10 billion (~$120.24 million) for the energy purchased in October 2023.
It recently <a href="https://www.mercomindia.com/seci-1-gw-ists-connected-solar-projects" target="_blank" rel="noopener">issued</a> a tender to select solar power developers for setting up 1 GW inter-state transmission system-connected solar projects (Tranche XII) in India.
Subscribe to Mercom’s <a href="https://www.mercomindia.com/product/india-solar-tender-tracker" target="_blank" rel="noopener">India Solar Tender Tracker</a> to stay on top of the real-time tender activity.

SECI Invites Proposals for ₹10 Billion Term Loan for 300 MW Solar Project

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					</table>The UAE Banks Federation (<a href="https://www.uaebf.ae/en/index" target="_blank" rel="noopener">UBF</a>) has disclosed that six major banks, including the <a href="https://www.bankfab.com/en-ae/personal" target="_blank" rel="noopener">First Abu Dhabi Bank</a>, the <a href="https://www.adcb.com/en/personal/" target="_blank" rel="noopener">Abu Dhabi Commercial Bank</a>, the <a href="https://www.emiratesnbd.com/en" target="_blank" rel="noopener">Emirates NBD</a>, the <a href="https://www.dib.ae/" target="_blank" rel="noopener">Dubai Islamic Bank</a>, <a href="https://www.mashreqbank.com/en/uae/personal/digital-channels/online-banking/" target="_blank" rel="noopener">Mashreq</a>, and the <a href="https://www.adib.ae/en" target="_blank" rel="noopener">Abu Dhabi Islamic Bank</a>, have collectively channeled over AED190 billion (~$51.72 billion) into green financing for projects involving renewable energy, waste-to-energy, and green technology as of 2022.
The Federation emphasized that the issuance of green-focused funds and the provision of green finance have emerged as potent mechanisms for fulfilling the sustainability commitments of diverse entities within the UAE and the broader region.
The banks in the UAE have pledged to synchronize their lending and investment portfolios with the objective of achieving net zero emissions by the year 2050.
Speaking on green financing, Jamal Saleh, Director General of UBF, said: &#8220;Sustainability is a top priority for us. While the Central Bank of the UAE leads integrating it into the regulatory frameworks and advancing Islamic sustainable finance in the UAE, we at UBF are committed to supporting its goals in delivering necessary changes in our UAE finance sector. &#8221;
Saleh outlined three primary domains through which the members of the Federation will steer the evolution of the financial sector. Firstly, they will advance environmentally friendly initiatives by extending funding and releasing green bonds to support green projects. Secondly, the focus will be on fostering environmentally conscious behaviors among clients, small and medium-sized enterprises, suppliers, and vendors. Lastly, efforts will be directed towards quantifying and effectively overseeing the carbon footprint of each UBF member while also reporting on the reductions achieved collectively by the sector.
The Federation has established a highly skilled environmental, social, and governance (ESG) steering committee composed of experts in the field to propel the ESG and green finance domain. This committee operates under the guidance of the Central Bank of the UAE&#8217;s policy framework, which is set to incorporate sustainability principles in managing reserves and monetary operations. The ultimate aim is to enhance the foundations and structures supporting green finance.
The UAE has been leading the way in implementing sustainability principles and criteria within the realm of banking and finance.
Furthermore, the UAE holds a distinctive position as one of the early adopters in requiring sustainability reports as mandatory disclosures for publicly listed companies on the stock exchange.
The nation&#8217;s banking institutions have also taken the initiative to issue green sukuk and bonds, which have recently garnered a combined market value of approximately AED62.4 billion (~$16.99 billion).
These endeavors aim to access institutional funding sources that mitigate adverse climate and environmental effects, thereby reinforcing the sector&#8217;s involvement in realizing a comprehensive framework for sustainable development. These efforts also offer attractive returns for investors.
The United Nations has organized the Net-Zero Banking Alliance, an assembly of banks on a global scale, collectively representing more than 40% of the total assets within the global banking sector.
Last month, Abu Dhabi Future Energy Company Masdar <a href="https://www.mercomindia.com/uaes-masdar-raises-750-million-green-bonds" target="_blank" rel="noopener">completed</a> its inaugural green bond issuance, raising $750 million by issuing 10-year senior unsecured notes. The issuance of the bond was coordinated and offered through a syndicate of joint lead managers and book runners, which included BNP Paribas, Citi, First Abu Dhabi Bank, HSBC, SMBC Nikko, Société Générale, and Standard Chartered.
Earlier, the United Arab Emirates Cabinet had <a href="https://www.mercomindia.com/uae-54-billion-investment-triple-renewables" target="_blank" rel="noopener">approved</a> the updated UAE National Energy Strategy, which aims to triple the contribution of renewable energy by 2030, mitigate the effects of climate change, and achieve climate neutrality.

UAE Banks Prioritize Green Financing to Tackle Climate Change

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					</table>Access to finance is vital for solar developers who fall under Micro, Small, and Medium Enterprises (MSME) to invest in infrastructure, technology, research, and development and expand their operations.
While the government has tried to support MSMEs operating in the solar industry with certain initiatives, small developers are still beset by the challenge of demanding collateral prerequisites and lengthy loan processing timelines.
Need for collateral-free loan
Like any other industry, the lending activities within the solar sector rely on public and private banks and non-banking financial companies (NBFCs).
&#8220;The MSMEs receive loans for 20% of the turnover. But turnover can increase only when the funding facility is available. It&#8217;s a catch-22 situation. Until the company has access to cash flow, it cannot churn that capital, build the turnover, and become eligible for Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) loans,&#8221; Hitaksh Sachar, Director at <a href="http://asun.co.in/" target="_blank" rel="noopener">Asun Solar</a> said.
Primarily focused on the rooftop segment, MSMEs often face challenges securing collateral-free loans from lending institutions. These smaller projects are not perceived as highly profitable by lenders.
Rajeeb Das, Director of <a href="https://greenfinity.co.in/" target="_blank" rel="noopener">Greenfinity Powertech</a>, feels that solar MSMEs are unlike big corporates and do not have sufficient capital. &#8220;Non-collateral-based financing is not readily available. The banks and NBFCs are financing projects based on the financial records of MSMEs. We&#8217;re not getting funding for bigger projects &#8211; for more than 1 MW or 2 MW capacity.&#8221;
Due to concerns about the financial stability of their businesses, many MSMEs hesitate to take on large-scale projects.
Raghunath T, Vice President and Head of Credit, <a href="https://vivritiamc.com/" target="_blank" rel="noopener">Vivriti Asset Management</a>, said, &#8220;This is a feature of the Indian bank loan market where banks have apprehensions on lending to any company (in other sectors as well) without collateral property such as the promoters&#8217; residential property or land holdings.&#8221;
Way Out for MSMEs 
The government has recently increased the cap for collateral-free loans to MSMEs from ₹10 million (~$120,852) to ₹50 million (~$604,260), providing flexibility to many small-scale developers.
Raveendiran Dhanasekaran, CEO of <a href="https://www.viridisindia.com/" target="_blank" rel="noopener">Viridis Engineering</a>, stressed that non-collateral funding of ₹50 million (~$604,260) would benefit the MSMEs and improve their participation in the solar industry.
Sachar believes that even though banks are providing loans under the new cap, it is essential for them to consider expanding it further as the project costs continue to rise.
He said, &#8220;India can learn about lending to MSME manufacturers from China. They should further increase the working capital to ₹100 million (~$1.21 million).&#8221;
Anburaj C, Deputy General Manager at <a href="https://www.sidbi.in/en" target="_blank" rel="noopener">SIDBI</a>, says that his organization has started lending based on project capacities.
He said, &#8220;We have a separate program for projects other than captive. We also have a green finance program, providing loans for third-party projects. But for this, we may require collateral. First, we examine the company&#8217;s financials. There are other factors also, like the location of the projects, the types of modules being used, and the capacity of the project. The bottom line is that if the balance sheet of the MSME is good, we provide loans,&#8221; he said.
For developers planning to install larger projects or even multiple projects of smaller capacities, it is challenging to procure loans due to the increased project costs.
For a 5 MW project, developers would need, on average, ₹200 million (~$2.43 million), which is not covered under the collateral-free loans cap.
According to Das, even with the extended cap, non-collateral funding is a must for the survival of MSMEs. The lending institutions can provide funding based on the company&#8217;s financials.
&#8220;The government can act as a guarantor to help MSMEs secure loans. For MSMEs, the project itself can act as collateral, and the lending institutions can provide loans based on the projects,&#8221; he adds.
Sandeep Upadhyay, Managing Director at <a href="https://www.centrum.co.in/" target="_blank" rel="noopener">Centrum Capital</a>, said, &#8220;There has to be a pool of capital which should be made available to the small-scale developers, in line with Government of India&#8217;s initiative to support the MSMEs. Perhaps some of these developers will qualify to utilize those credit lines.
&#8220;Alternatively, a separate pool of capital could be explored for these small-scale developers from financial institutions and multilateral funding agencies. For example, a specific line of credit is available from World Bank to channel funding through public sector banks, including large banks like State Bank of India.&#8221;
Raghunath emphasized that MSMEs must build their financials over a long time by executing multiple small projects and establishing themselves as reliable borrowers that financing institutions can trust.
He said, &#8220;Investors like us place a higher emphasis on cash flows and finance based on the merits of the project. However, the past track record is an important consideration. Hence, the best approach for developers would be to establish execution capabilities by taking up projects on an engineering, procurement, and construction (EPC) basis, establishing client relationships, strengthening the company&#8217;s financials, and then approaching project lenders. Their past record in executing EPC projects can also play an important role in securing loans. &#8221;
Stressing the need to improve the financial capabilities of MSMEs, Raghunath added that government-backed programs are available for MSMEs, but they will not help MSMEs in the long run. They can increase the cap to a certain limit but not beyond that. Beyond a point, relying on these measures is not a solution.
Government policies and support are crucial for the growth of MSMEs in the solar sector. The government can provide financial incentives, such as subsidies, low-interest loans, and tax benefits, to encourage MSMEs&#8217; participation and investment in the solar industry.
&#8220;In foreign markets, there is a term called securitization. For example, five MSME developers join hands and seek loans. Then someone like the World Bank or any other such financial institution can give a credit enhancement and say that if someone defaults, it will bear the loss. There are a lot of multilateral institutions that provide credit enhancements. If they can provide a loss guarantee to lenders like us, then we can provide the loans. It&#8217;s not prevalent in the solar sector, but we can finance MSMEs with these types of credit enhancement structures in place,&#8221; Raghunath said.
MSMEs are a vital cog in the solar ecosystem and play an important role in India&#8217;s transition to clean energy. The government must strongly consider ways to provide these companies access to collateral-free loans and expand their access to finance through various channels.
Earlier, Mercom had <a href="https://www.mercomindia.com/solar-msme-technology-upgradation" target="_blank" rel="noopener">written</a> about MSMEs struggling to compete with the bigger entities in the solar manufacturing space.

Smaller Solar Developers Urgently Need Collateral-Free Loans for Expansion

<a href="https://recindia.nic.in/home" target="_blank" rel="noopener">REC Limited</a>, a public infrastructure finance company, involved in financing power projects, has raised $1.175 billion (~₹82.45 billion) from a consortium of seven banks as the Mandated Lead Arrangers and Bookrunners.
According to the press release, it is the single largest syndicated loan raised in the international bank loan market by any Indian non-banking financial company (NBFC).
The deal benchmarked to the USD LIBOR was financed by seven Indian and international banks, including Axis Bank, Bank of Baroda, Bank of India, Canara Bank, DBS, Mitsubishi UFJ Financial Group (MUFG), and Sumitomo Mitsui Banking Corporation (SMBC).
REC plans to use the transaction proceeds to fund infrastructure power projects permitted under the Reserve Bank of India guidelines.
As per the press release, the deal will be soon launched in the Asian Loan Syndication market to garner interest from a wider investor community.
Sharing his views on the successful transaction, Sanjay Malhotra, Chairman and MD of REC, said, “This extra commercial borrowing (ECB) represents REC’s efforts in diversifying its sources of borrowings at competitive pricing while remaining attractive to the Indian and International lenders. We are pleased with the overwhelming response of Banks to this ECB, which is the largest ever offshore term loan facility for any Indian NBFC.”
The company provides financial assistance to state electricity boards, state governments, central and state power utilities, independent power producers, rural electric cooperatives, and private sector utilities.
Last month, REC <a href="https://mercomindia.com/rec-loan-kfw-bank-finance-solar/" target="_blank" rel="noopener">entered</a> into an agreement with Germany-based KfW Development Bank to avail official development assistance loan of $169.5 million (~₹12.51 billion). The agreement was signed under the Indo-German Bilateral Partnership after the Ministry of Finance’s approval.
Earlier, the company had <a href="https://mercomindia.com/rec-75-million-sofr-smbc/" target="_blank" rel="noopener">raised</a> a $75 million (~₹5.53 billion) five-year secured overnight financing rate (SOFR) linked syndicated term loan. Sumitomo Mitsui Banking Corporation, Singapore Branch, was appointed as the sole mandated lead arranger and bookrunner. It was the first SOFR-linked term loan for any NBFC in India. REC had also entered into an interest rate swap referencing SOFR to hedge the interest rate risk on the facility.
Also, last year, REC <a href="https://mercomindia.com/rec-raise-billion-through-bonds-debentures/" target="_blank" rel="noopener">sought</a> the approval of shareholders to raise ₹850 billion (~$11.63 billion) through the private placement of bonds or debentures.

REC Limited Raises $1.175 Billion to Provide Low-Cost Financing for Power Projects

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					</table>In the fourth article of our series covering all you need to know about rooftop solar systems, we focus on ways to finance your residential rooftop system. This write-up will help you understand the different ways to finance your rooftop installations through banks or financial institutions, the processes and the documentation involved, rates of interest applicable, and the collateral.
Check out the <a href="https://mercomindia.com/want-install-rooftop-solar-system-home/" target="_blank" rel="noopener noreferrer">first</a> and <a href="https://mercomindia.com/money-rooftop-solar-systems-save/" target="_blank" rel="noopener noreferrer">second</a> of the series.
The System Cost
The <a href="https://mercomindia.com/cost-install-1-kw-solar-residential-rooftop/" target="_blank" rel="noopener noreferrer">third</a> article in the series had shed light on the cost of the rooftop solar system, which depends on the price of the modules and inverters used.
The cost of a 1 kW rooftop solar system ranges from ₹45,000 (~$612) to ₹85,000 (~$1,156), excluding the batteries&#8217; cost. A 5 kW system could cost in the range of ₹225,000 (~$3,061) to ₹425,000 (~$5,782), excluding GST.
Financing Through Banks and NBFCs
The first line of financing is banks, which offer loans under top-up plans such as home loans and renovation loans. For this scenario, we are considering that the capital is invested by the consumers who own the rooftop solar systems on their homes.
Some banks specifically finance rooftop installations, albeit rates of interest vary significantly from one bank to another, starting anywhere from 10% to 18%, depending on the borrower&#8217;s source of income and risk profile. The maximum tenure for the loan again varies from bank to bank ranging from 1-5 years up to 20 years.
Even the securitization of the loan varies from one lender to another. Canara Bank will mortgage the residential property and hypothecate the solar equipment. Meanwhile, YES Bank, which has a tie-up with Luminous, can issue an unsecured loan.
<a href="https://mercomindia.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver.jpg"><img decoding="async" class="aligncenter size-full wp-image-23015" src="https://mercomindia.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver.jpg" alt="rooftop solar loans by bank_ver" width="100%" height="100%" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver.jpg 1685w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-300x244.jpg 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-768x624.jpg 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-1536x1249.jpg 1536w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-650x528.jpg 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-624x507.jpg 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-600x488.jpg 600w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/rooftop-solar-loans-by-bank_ver-1024x833.jpg 1024w" sizes="(max-width: 1685px) 100vw, 1685px" /></a>
Mercom spoke to Priyanka Mohan, Director of Kor Energy, who said, &#8220;There are several banks and non-banking financial institutions (NBFCs) where we line up our clients. However, we prefer that our customer&#8217;s existing banks take up the funding since they already have a rapport. We then send the detailed project report to the bank and ask our client to source the loan from them. If there are issues with the banks, we can always approach NBFCs and other institutions that offer solar funding.&#8221;
NBFCs finance solar installations on residential properties. However, unlike banks, the interest rates are quite steep, ranging from 13% to 24%, though most don&#8217;t demand collateral.
<a href="https://mercomindia.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver.jpg"><img decoding="async" class="aligncenter size-full wp-image-23014" src="https://mercomindia.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver.jpg" alt="Rooftop by NBFC banking chart_ver" width="100%" height="100%" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver.jpg 1849w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-300x271.jpg 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-768x693.jpg 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-1536x1386.jpg 1536w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-650x586.jpg 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-624x563.jpg 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-600x541.jpg 600w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2020/12/Rooftop-by-NBFC-banking-chart_ver-1024x924.jpg 1024w" sizes="(max-width: 1849px) 100vw, 1849px" /></a>
Retailer Option
Meanwhile, companies like Luminous, which has tie-ups with YES Bank and IDBI, also finance their end customers through their dealer networks.
The national sales head, solar, and assistant vice president at Luminous India, Sanjay KVS, spoke to Mercom about this, &#8220;Around 98% of our business comes from our distribution network, and we empower our retailer so that they can get us good business. Typically, our dealers are battery and inverter shops. Luminous makes a deal with the larger financial institutions and shares the offers with them. The commercial dues and charges are covered by Luminous so that the customer and the retailer do not have to pay them.&#8221;
Customers can also pay Equated Monthly Installment (EMI) through credit cards as they do with other consumer durables. These options are only meant for the components, where the customer comes to the counter, buys the battery/inverter/panel, swipes his credit card, and then pays the EMI later. Sanjay added that Luminous has an agreement with Pine Labs &#8211; an Indian merchant platform that provides financing and last-mile retail transaction technology.
As for customers who want full-fledged installations, Sanjay said, &#8220;We tie-up with financial institutions such as IDBI and YES Bank, we don&#8217;t offer direct financing. The institutions will assess the creditworthiness, the project size, and, based on that, the loan is approved and disbursed.&#8221;
Installers Vouch for Alternative Means of Funding
When Mercom spoke with various residential rooftop installers, their responses showed clear disdain for bank finance. According to some installers, it makes more sense to opt for a consumer durable loan or a personal loan instead of going for a home loan top-up or NBFC financing.
Sushil Sarawagi, Director of Kor Energy, said, &#8220;There are certain specialized products which the banks have floated for residential rooftop solar. The RBI has instructed banks and NBFCs to include rooftop installations under home loans. But the issue is that under home loans or home improvement loans, the customer has to mortgage their property for ₹500,000-₹1 million (~$6,746-~$13,493). This becomes a bone of contention for the customers.&#8221;
He further added, &#8220;Although we refer our clients to banks, they are not keen on bank financing as they find the whole documentation and mortgage process cumbersome. Our customers are seeking easy finance options similar to consumer durable loans. Through such options, they secure finance for a year or so without significant documentation or any mortgage.&#8221;
Arshi Chadha, COO of Sunson Energy, raised similar sentiments and stated that it&#8217;s more feasible to finance residential properties in a cluster (such as housing societies) instead of funding one residential property. It ensures that payments keep flowing.
&#8220;We are experimenting with a new financing model on a pilot basis where we are approaching clients whom we know will stay with us in the long-term, and we take 50% of the payment from them upfront during the installation phase. The remaining 50% would be under the EMI option,&#8221; Arshi told Mercom.
Arshi added that although Sunson works on securing loans, the deals are quite expensive. &#8220;The rates are high as 16% whether our clients approach banks or NBFCs, and it makes more sense to go for personal loans. I have gone to every bank&#8217;s head office, from Bank of Baroda to SBI. Banks like SBI will only finance rooftop installations as a top-up loan. One of my clients owns a 50-year-old home worth ₹100 million (~$1.3 million); why would they give it as collateral for a ₹1million (~$13,493) loan. The ideal way to finance rooftop installations is through loans with zero collateral.&#8221;
In summation, there are plenty of choices for the end consumer to finance their rooftop solar installation &#8211; from conventional mortgage loans to &#8216;no security&#8217; personal loans and even over the counter credit card payment options. It boils down to being aware of all the available options to make the right financing choice.
Contact us by filling out this <a href="https://mercomindia.com/lead-generation-form/" target="_blank" rel="noopener noreferrer">form</a> if you are planning to install a rooftop solar system for your home.

Residential Rooftop Solar Loans: All You Need to Know

Just when the United Nations Principles for Responsible Banking (PRB) marked its first anniversary, the latest review of the signatory banks&#8217; financial records shows how much they deviated from their stated goals.
The Principal for Responsible Banking is a framework for ensuring that signatory banks&#8217; strategy and practice align with the vision society has set out for its future in the Sustainable Development Goals and the Paris Climate Agreement. First launched by 132 banks on September 22, 2019 –– during the New York City Climate Week –– now 187 banks and counting have signed up for the framework.
The review of the records noted that 20 such banks had provided over $1.2 trillion in loans and underwriting to petrochemical companies between 2016 and 2019.
PRB banks have committed to assess the impacts of their financing and align their business strategy and practice with climate goals. Yet, 20 signatory banks are among the largest global financiers of the oil corporations and are the most exposed to forest-risk commodities noted the review.
These banks have provided over $52 billion in loans, underwriting, and investments between 2016 and 2020 (Q1) to commodities driving deforestation. Total financing is on the rise in recent years, and the majority of these banks are failing to disclose these impacts.
PRB banks are expected to align their financing with the recently launched Principles for Paris Aligned Financial Institutions by ending finance for fossil fuels, deforestation, land degradation, and activities that facilitate human/indigenous rights violations.
In 2019, seven of the world&#8217;s largest multilateral development banks <a href="https://mercomindia.com/climate-financing-multilateral-development-banks/" target="_blank" rel="noopener noreferrer">provided</a> $61.6 billion (~₹4.6 trillion) in climate financing, out of which $41.5 billion (~₹3.09 trillion) was offered to low-income and medium-income economies.
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Banks Continue to Support Fossil Fuels Despite Pact to Support Climate Deal

It is common knowledge that the solar industry in India has several important issues that need to be resolved for the industry to keep growing. The Ministry of New and Renewable Energy (MNRE) organized a meeting in the national capital with all the relevant stakeholders of the solar photovoltaic (PV) sector to discuss the problems faced by solar PV sector in India.
Financial institutions (banks), solar PV project developers, module manufacturers, implementing agencies, were present for the discussion and they shared their views with the government on the current challenges. After the meeting, Mercom got in touch with a few who were a part of the deliberation and these were some of the important takeaways from the deliberation between the government and the industry:
<ul>
<li>The stakeholders felt that the MNRE is showing positivity and a proactive approach towards tackling new challenges that may surface in the industry.</li>
<li>After the meeting, it was agreed upon by both parties that renewable energy must be the priority of the government. It must be prioritized above conventional sources of energy.</li>
<li>Several bankers were happy with the growth of solar and it was discussed to give working capital loans for project development. It was agreed that such loans will be easy to service.</li>
<li>Few bankers were skeptical, but the overall view of financing institutions seemed positive.</li>
<li>Financial institutions do not want to be blamed for not lending to the sector as all of the current bets taken by the developers and policy changes made by the government ends up as risks on the lap of the lenders.</li>
<li>Imposition of safeguard and its effect on tariff was also discussed during the meet. Apart from that, land availability and transmission issues were also discussed.</li>
<li>The two parties also discussed the problem of delay in payment on the part of DISCOMs and how they should be supported.</li>
<li>Developers have requested the MNRE to impose fines/penalty in case the procurer does not buy power.</li>
</ul>
Shekhar Dutt, Director General, Solar Power Developers Association (SPDA) told Mercom, “The industry welcomes the initiative undertaken by the Honorable minister to deliberate on the concerns of industry and bankers in RE financing. As renewable energy is one of the fastest growing sectors in India, an assurance from MNRE on every tariff being discovered in the bids as a viable investment to fund, is a progressive move. With effective implementation of payment security mechanism (PSM) by DISCOMs, solar power developers are optimistic about fast track resolutions in RE financing.
Only a few days ago, raising concern over the recent proposal by the government to impose caps on solar tariffs, the SPDA <a href="https://mercomindia.com/solar-developers-request-govt-tariff-caps/" target="_blank" rel="noopener">had written</a> to the government cautioning against the move. As <a href="https://mercomindia.com/mnre-asks-seci-upper-ceiling-solar-tariff/" target="_blank" rel="noopener">reported recently</a> by Mercom, the <a href="http://www.mnre.gov.in/" target="_blank" rel="noopener">MNRE</a> had issued a letter (reviewed by Mercom) directing Solar Energy Corporation of India (<a href="http://seci.co.in/" target="_blank" rel="noopener">SECI</a>) to set the maximum permissible solar tariff at ₹2.50 (~$0.036)/kWh without safeguard duty and ₹2.68 (~$0.038)/kWh if  safeguard duty is levied.
Overall, the meeting concluded on a positive note and all the stakeholders were able to put forth their views on various issues facing the industry currently. “It will go a long way in mitigating the challenges and uncertainties that arise due to them,’ a stakeholder present at the meeting told Mercom.

Banks Don’t want to be Blamed for not Lending to Solar Projects Due to Risks Taken by Others

India’s banking sector is staring at potential dud assets worth $38 billion (~₹2,470 billion) from the power sector, according to a latest report released by the <a href="http://bofa-india.com/" target="_blank" rel="noopener">Bank of America</a> and Merrill Lynch.
This comes at a time when the country is already grappling with an enormous amount of bad loans.
&#8220;Of the $178 billion (~₹11,571 billion) of debt of the power sector, $53 billion (~₹3,445 billion) are already under stress (primarily to the generation sector) and of this, as much as $38 billion have the potential of being written-off as bad loans,&#8221; the Bank of America-Merrill Lynch report stated.
According to news agency Press Trust of India (PTI), the report is based on the fact that as much as 71 GW of private sector coal-based projects are facing bankruptcy filings at various National Company Law Tribunals (NCLTs).
The report further breaks down the distribution of the $178 billion (~₹11,571 billion) loan. According to the report, which has been authored by Amish Shah and Sriharsh Singh, the distribution companies are dealing with a burden of $65 billion (~₹4,225 billion), generation companies have a load of $77 billion (~₹5,006 billion), and transmission firms have a debt burden of $36 billion.
The report further asserts that of the $53 billion (~₹3,445 billion) of stressed loans, a staggering amount of $50 billion (~₹3,250 billion) belong to the power generation sector alone.
Of this $178 billion (~₹11,571 billion) debt mountain, banks have the largest at 53 percent of the total loans, followed by non-banking finance companies (NBFCs) at 35 percent and the balance from the states.
The report, however, hails the government’s Ujwal DISCOM Assurance Yojana (UDAY) program, saying that the loans to the distribution sector, which were earlier stressed, are now better off as they have been given quasi-state guarantees and restructuring under the initiative.
The UDAY program was launched by the Ministry of Power in November 2015 to target the debt reduction of DISCOMs. The objective of the program is aimed at increasing the financial viability of the distribution companies (DISCOMs) in the country which are reeling under the burden of debts.
In January 2018, Mercom <a href="https://mercomindia.com/states-uday-program-cut-financial-losses-2017/" target="_blank" rel="noopener">reported</a> that the Distribution Companies (DISCOMs) in states that joined the Ujwal DISCOM Assurance Yojana (<a href="https://www.uday.gov.in/home.php" target="_blank" rel="noopener">UDAY</a>) program have cut down their financial losses from ₹515.9 billion (~$8.14 billion) in the Financial Year (FY) 2016 to ₹348.3 billion (~$5.49 billion) in 2017.
In <a href="https://mercomindia.com/%E2%82%B92-09-trillion-discom-debt-taken-states-uday/" target="_blank" rel="noopener">August 2017</a>, Mercom reported that the states participating in the UDAY program have taken over debt of ₹2.09 trillion (~$32.5 billion) from their DISCOMs. This is almost half of the ₹4.3 trillion (~$64 billion) of debt by state DISCOMs.
The Bank of America-Merrill Lynch report added that about 43 percent of loans have been extended to the power generation sector, followed by distribution at 37 percent and transmission at 20 percent.
The report further noted that the $116 billion (~₹7,541 billion) national power utilities lose around $9 billion annually but can turnaround without hiking consumer tariffs and also continue to offer the present average subsidy of two percent if the many of its cost-inefficiencies are resolved.

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