Indian Solar Funding

Solar professionals across the world have been discussing the feasibility of projects under NVVN; that conducted India’s first solar auction. Its suprising that many of the players selected have no experience in energy (thermal power, biomass, wind, hydro) or been able to prove that they can keep projects afloat earning low margins. Some of the selectors include a woolen yarn maker, an animation company and an industrial pipes supplier with no experience building power plants.

Industry professionals are expecting to see some failures also– inability to achieve financial closure or get returns. At the same time, some point out that they are looking at going through the learning phase now along with showcasing their first project under the National Mission; direct financial returns from the first project may not be important.

Suddenly it seems that PPA projects are not able to demand premium as expected. The reason being that financial closures are not proving out to be easy. Higher borrowing costs, reluctance from banks and not enough confidence in the system for foreign lending institutions to look at this field; are some of the challenges for solar promoters.

After discussion with some European and American lending institutions, it looks like we will need to wait for some more time before the foreign lending institutions get confident of financing solar projects in India. They are of the opinion that they are far too many challenges and quite a few of them are unforeseen. However some institutions are ready to look at projects that provide higher IRR and not overloaded with higher EPC costs.

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