According to reports, India’s clean energy industry is enthused by the inclusion of renewables under priority sector lending, a move that is expected to translate into greener operations by small industries and propel small-scale projects.
As per a notification by the Reserve Bank of India (RBI), this will provide “bank loans up to a limit of Rs 15 crore to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification. For individual households, the loan limit will be Rs 10 lakh per borrower.”
Wind turbine manufacturer Suzlon called this a progressive move.
“The notification by RBI will boost investments from the SME (small and medium-sized enterprises) sector in renewable space as the finance will be available at a competitive rate as the bankers have separate allocation and priority for the sector. Further, it will help SMEs to grow and expand their manufacturing capacity in a larger way as they will become competitive because of low cost of energy for the next 25 years and achieve availability of energy for captive use,” said Tulsi Tanti, chairman of Suzlon Group.
Other clean energy companies, while hailing the move as Prime Minister Narendra Modi’s commitment to clean energy target of 175 gigawatt by 2022, pointed out the other measures that the sector looks forward to.
“While this will surely boost the growth of the industry, we believe there is a need for additional inflow of funds to finance large-scale projects in the country and we look forward to these developments in the near future. With the growing energy needs of the country and an ambitious solar target to achieve, we are eagerly awaiting the next steps,” said Vineet Mittal, vice chairman of Welspun Renewables.
The next step, according to many companies, should be to make a larger corpus of financing available under priority sector lending.
“The current changes, to include projects of only up to Rs 15 crore, is a good start but for it to make a meaningful difference, this limit should be increased to Rs 500 crore,” said Ratul Puri, chairman of Hindustan Powerprojects, which aims to set up 2 gigwatt of solar projects in the next three years.
Companies engaged in the rural off-grid sector pointed out that a similar arrangement had not translated into results for them a couple of years ago and that more needs to be done.
“It’s a good step to have solar loans up to Rs 15 crore counted in priority sector lending targets. But only that doesn’t help. Loans to solar off-grid sector were part of the targets for the past two years but that did not really translate into higher solar off-grid lending by banks at the ground level. Specific schemes launched by the ministry of new and renewable energy for solar financing through NABARD helped much more in achieving the objective,” said Shubhra Mohanka, director of Gautam Solar.
If within priority sector, a small proportion such as 1-2% is allocated towards only solar lending, it will go a long way and achieve the desired target of banks lending more for solar energy, Mohanka added.
At present, India has only 33 gigawatt of clean energy capacity, with 22 gigawatt from wind, approximately 3 gigawatt from solar energy and the remaining from small hydro and biomass projects.
In November last year, the government set an ambitious target of setting up 175 gigawatt of clean energy projects by 2022, with 100 gigawatt from solar, about 60 gigawatt from wind and the rest from small hydro and biomass.