Nov 18 2010
According to Mr. Don Purka, senior investment specialist for the Manila based Asian Development bank, the solar projects and solar developers may find it difficult to get loans to complete their projects because of their size and the prevailing low tariff.
In his recent meeting during the Clean Energy Forum in Singapore, he said that unless the power purchase agreements are changed, the banks may hesitate to fund solar projects in India. He added that the government’s decision to maintain 5 MW as the standard size for the solar projects for the first round of awards needs reconsideration and should consider projects with 30 MW or 50 MW capability to meet the energy targets. He added that the large scale projects will invite competitive bidding from the solar project builders and suggests that bidding ultimately may go down to INR 12 for a kilowatt-hour instead of the current government offer of INR 18 for winning the bid.
Jotdeep Singh, who heads Rabobank’s Asia Renewable energy and infrastructure finance, said that the lending banks are concerned about recovering the loans from the power distribution companies and their capability to pay. He added that most of the power distribution companies located in India suffer from dearth of financial sources and may become defaulters. He further said that unlike small sized hydro, biomass or wind projects, the tariff structure in solar projects are high with inherent risks and the loan arrangements need to be without flaws or loopholes. To start with, he wanted the government to guarantee such payments for the entire life time of the projects to enable the banks to lend for such projects partially or fully and wanted to withdraw the guarantee once the commercial production is achieved.
Mr. AK Maggu, NTPC Vidyut Vyapar Nigam’s additional general manager, said that during the first round of the National Solar Mission initiative, the government has received bids to produce 5,126 MW solar power. He added that NTPC Vidyut will purchase such produced power from the companies and mix it with its cost-effective coal generated electricity from its parent company NTPC, to trade it with the distribution companies. India’s National Solar Mission is planning to reach 1000 MW solar power production by 2013. The mission is ambitious to reach 20,000 MW power productions by 2022 from its current solar power production of 12 MW.
Source: http://www.adb.org/