Solar power developers for separate status to sector

With banks and financial institutions unable to offer liberal funding to solar power projects due to Reserve Bank of India?s (RBI) stringent sector exposure limit norms, developers have urged the government to treat solar industry as a separate sector to facilitate its financing.

The issue was raised by solar project developers at the ongoing consultations with the government to finalise plan for the second phase of capacity addition under the national solar mission where fund requirement is estimated at over R1 lakh crore.

Currently, loans provided by banks and financial institutions to solar projects are counted towards their overall exposure to the power sector. Since majority of banks have already hit their power sector exposure ceilings, there is little financing available for solar projects.

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?By 2016, generation costs of photovoltaic solar plants should be lower compared with thermal plants. Therefore, solar power generation should be promoted by treating it as a separate sector from the power industry to ensure easy bank lending to it,? said Sanjay Jaiswal, MP, who was also involved with Climate Parliament, a pressure group for promotion of renewable power. Jaiswal has also raised the issue in Parliament.

The ministry of new and renewable energy has recently begun consultations with key industry players on issues like project size, equipment procurement norms, project implementation time-frame and financing.

?We have already held two rounds of consultations with the industry on capacity addition plan for the second phase. It should take us another two rounds to finalise the plan. We hope to complete the task by November 15,? a senior MNRE official told FE.

The second phase ( 2012-17) of the solar mission has envisaged capacity addition of 9,000 mw. Of this, 3,000 mw is to be added through MNRE and the balance capacity will be implemented by state governments. MNRE is expected to launch bidding by year end.

The government has envisaged adding 20,000 mw grid-connected solar capacity in three phases under the mission. In the first phase (2009-13), projects are being implemented to add 1,000 mw.