Financing Decentralized and Off-grid Solar in India

Published in Solar Quarter

India’s energy and electricity sectors are rapidly undergoing transformation. Deployment of utility-scale Renewable Energy, particularly Wind and Solar Power, has progressed rapidly over the last few years despite recent challenges. Significant progress has also been made by the Central Government under its Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) program. According to the Rural Electrification Corporation’s (REC) Grameen Vidyutikaran (GARV) dashboard, out of the 18,452 villages in India that were unelectrified in 2014, over 15,000 have been electrified as of Nov 2017. With this, over 99.5% village electrification rate has been achieved and 100% village electrification rate will be achieved soon, which is a major achievement! However, achieving 100% household electrification rate in India is still a challenge. About 40 million households in India lack access to grid electricity as of mid-2017, which translates to over 200 million people. The government’s ‘Saubhagya’ program, launched in September 2017, aims to electrify all households in India by December 2018, and targets 24x7 reliable electricity to all households by 2022.
Photo by Prashanth Pinha on Unsplash

In this article, Sagar gives an overview of the Solar Home System (SHS) market in India. He further elaborates on the key challenges and opportunities that exist in this market. Some excerpts from the article are shared below:

…experience from states in India and from other countries that have achieved universal rural electrification in recent years shows that decentralized solutions play an important role in providing reliable and stable access to electricity, while meeting rapidly growing demand….For rural, off-grid areas, renewable energy mini-grids and SHS offer cost-effective and reliable options…
…Key challenges to scaling up decentralized solar in India are relatively lower policy and regulatory focus and limited availability of low-cost asset finance and consumer finance…
… Hence, structures such as credit guarantees could potentially reduce the risk perception of such installations, and pooled asset finance/warehousing facilities, asset-backed securitization (ABS) and receivables financing structures also need to be explored. A foreign currency hedging facility could enable these companies raise lower-cost debt from abroad…

The complete article can be read at the following link:

Sagar Gubbi is the Managing Partner at Ecoforge Advisors.