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Government should give easier access to funds for solar sector: FICCI

According to reports, to give a boost to domestic solar energy projects, a separate window under the National Clean Energy Fund (NCEF) should be created to provide easy access to finance for such clean energy technology, industry body Ficci has said.

“A FICCI White Paper on reducing the cost of finance for solar energy projects through the National Clean Energy Fund (NCEF) has suggested creation of a separate window under the Fund to enable easier access to funds,” a statement said.

The White Paper was released this week and submitted to the government for consideration.

The National Clean Energy Fund, which was announced in the budget 2011-12, is a step for funding research and innovative projects in clean energy technology.

The White Paper also suggests innovative models for sharing and distribution of risk and cost of financing through NCEF as the cost of financing from the domestic Financial Institutions is high.

“Given the challenges faced by the solar industry in India due to the high cost of finance, the government’s decision to extend an interest subsidy from the National Clean Energy Fund for enabling lowering the cost of finance for renewable energy projects is a commendable step,” the statement said.

It will help provide a much-needed boost to the renewable energy sector in the country.

The paper recommends that the interest subsidy be made available for eligible projects and routed through the lenders to such projects so that borrowers would get lower interest rates for the loans while the lenders directly receive the subsidy.

FICCI Solar Energy Task Force was launched in February 2010, with the launch of Jawaharlal Nehru National Solar Mission (JNNSM) to provide a platform for the solar energy sector to deliberate on policy and regulatory issues and advance interests of the sector at domestic and global platforms.

One comment

  1. Thank FICCI that they have considered my mail written to FICCI India and Abroad. I wrote to PMO and CII and has been my effort to convince these bodies to arrange a level playing field to avoid Accelerated Depreciation, Viability Gap Funding, instead a performance based Interest subsidy shall be arranged by the government. and the business model uploaded on my start up company web site:

    Without Tax chori schemes or policies, small, new and learned new generation Entrepreneurs can generate low cost solar Energy.

    New Generation Entrepreneurs can only suggest such innovative methods and not the large corporate as they get tax savings benefits (which is a huge loss to the nation!! and lobby for VGF to get free equity from the Government), thus, Entrepreneurship Funding must take place without further loss to the government exchequer and following recommendation is made to the government by me for this 750MW:

    Please take note of our suggestions and input sent to MNRE on the draft policy for 750 MW solar PV as formulated by them.

    My input will help in :
    Large Scale Entrepreneurship funding,
    Local skill job creation by hiring candidates from local Polytechnic or ITI institutes,
    Energy Access for All,
    No exit plans (eliminate such short sight of sick promoters or asset management company business models) by Corporate companies with unsustainable business plans,
    low cost energy generation,
    many service providing agencies with skill generation will be the benefits through our company suggestion to MNRE.

    The present draft policy on VGF will only allow the private companies to have 200% equity due to wrong policy guidelines. Thus, the TOPI PEHENO concept of many Corporate companies engaged in Renewable energy business i.e take away the Accelerated Depreciation and also the Viability Gap funding and then sell the project to some one in the name Clean tech investment. Later, the new acquirer will approach the Government to increase the tariff by breaking the PPA as has been done in case of Coal based energy generation.

    My suggestion of 10 MW per taluka (refer the trailing mail) will add around 4500 taluka x 10 = 45,000 MW of Solar pV with lot of job creation with an uniform business plan by hiring the experienced and quality Project Directors by SECI and making them responsible to take care of each plant, thus, mentoring, controlled stakes with responsibility to govern through locally hired MCA registered service provider companies for the sustainability.

    Following is our input:

    a). Government has decided to provide the grant up to 30% in the form of Viability Gap Funding through whatever budgetary mechanism.

    b). It would be more appropriate to establish the projects through the government only with state nodal agencies in EACH TALUKA for a minimum capacity of 10 MW by hiring a qualified Entrepreneur company which is listed with MCA to provide Project Management service and the Plant operation and Maintenance for 25 years with Service fee.

    c). Government shall appoint a Project Director by hiring a world class EPC company with an Energy Generation guarantee with their supplied equipment with two years supervision and onsite training to the locally hired Entrepreneur company which provides Project Management support cum plant operation and Maintenance.

    d). Since the government will arrange both equity and debt, the cost of finance will be low and hence low cost energy can be generated and offered to the people. The solar Power obligations or RPO obligations can easily be met with a precondition to buy RECs or to buy the power at such low cost, which will be higher than APPC costs.

    e). Local / rural entrepreneur creation with local low cost services and local job creation will be a great benefit in Each Taluka and hence a very good distributed generation without much problem in Land acquisition or Land mafia or no cost escalations on account of land. Since, the land will be the government land, the cost of project and time to acquire the land will also be reduced.

    f). The distribution lines can also be very well coordinated due to the involvement of state agencies and hence the time and costs will come down.

    g). No need to worry of solar irradiation or low kwh generation as the ENERGY ACCESS FOR ALL shall be the criteria even if the 8 to 10% less energy generation takes place in low irradiation area. This can be compensated by solar irrigation pumping through ponds etc by increasing the irrigation lands or such other allied benefits. Solar PV power project in Each taluka will ensure jobs in every taluka and the minimum power in the local grid and even in remote places.

    h). Cartel through large corporate companies or seeking more money like what we are experiencing in UMPP of Coal based power projects etc will be eliminated…..

    i). Change of state government ruling or political dynamics will not affect the payment from the DISCOMs to these projects, as the owner of the project is the Government.

    j). Let SECI become a large Project Management company including financing company to develop 10 to 20 MW solar PV power project in Each Taluka with state nodal agencies by hiring Local Companies to outsource the service during Project implementation and its operation and maintenance till the plant life with a service fee with cost escalations…… If a company does not provide services, we can find many or create many such companies, thus, a low cost PPP model with mentoring and stake control with a learned business plan with financial numbers to generate low cost energy through best EPC companies with energy generation warranty and guarantee with low cost funds.

    Praveen Kulkarni / +919898296247

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