The session on Solar financing was presented by State Bank of India (SBI), IDFC PE, IREDA, and SunEdison India.
The solar business has 3 main attributes: technology, finance and execution. Cuz of not clear understanding of technology and not enough proof of execution, banks and other investors are being conservative of investing in solar. But they all recognise the huge opportunity that solar presents in India over the next decade. Institutions will need to work out customized solar financing products/solutions. SBI is currently working on that. PE firms will need to rework their strategies slighlty keeping in view the long term payout on solar, the different business models (off-grid, grid, and small plants) and the technology changes. The other challenge faced here is that of sustainibility and scability.
Mr.Majumdar, IREDA spoke on how financial institutions in India took 6-8 years to be comfortable with wind projects. But solar does not have that time luxury; institutions need to embrace the sector and quick. IREDA is working out their subsidy and low interest loan system through nodal agencies and banks to support solar projects across the country.
India is expected to see 1300MW of solar projects over the next 2-3 years; with each MW cost being Rs.14 crores we are looking at an investment of ~ Rs.18000 crores. This does not include solar investments that will be seen in manufacturing set-up of solar cell, modules, inverters, batteries, etc.
We all are currently in an exciting phase of a new sunrise industry; that is expected to grow to 20,000MW by 2020.