India will not meet its rooftop solar power target if it doesn’t help MSMEs

A 200 kW rooftop solar system such as this at Sri Manjunath Foods and Packagings Pvt. Ltd. in Mangalore helps generate 3 lakh units of power annually. Pic: TOI
  • A report from Deloitte and Climate Investment Funds states that lack of low-cost financing is a major hurdle in MSMEs adding rooftop solar power projects.
  • In India, the rooftop solar capacity stood at 3.3GW in September 2018 while it aims to have 40 GW by 2022.
India has set high targets for itself – to achieve 40 GW of rooftop solar capacity by 2022 and 100 GW of solar power by the same year. The Indian MSME sector could be instrumental in achieving this target but there are multiple challenges that the government needs to address first, according to a report by Deloitte and Climate Investment Funds (CIF).

The report states that involving MSMEs “requires addressing issues related to lack of low-cost financing, inadequate level of awareness, and lack of rooftop aggregation models”.

India still has a long way to go in achieving its rooftop solar capacity target. According to a report by Bridge to India, the rooftop solar capacity stood at 3.3 GW by September 2018.

The report further predicts that the total capacity addition will be 18.8 GW in the next five years, which still doesn’t meet India’s target.

Rooftop solar is important because it can be used for residential and commercial properties, making way for local utilization. So far, India’s rooftop solar projects have been mainly run by corporates but in order to scale up the capacity, MSMEs will have to be involved in the process.

Funding will be key for growing rooftop solar capacity for MSMEs. According to a report by Climate Policy Initiative, MSMEs, “do not have high enough credit ratings to access finance under the two prevailing rooftop solar business models, the Capital Expenditure model and the Power Purchase Agreement model.”

So for them to step up in the solar race, the government needs to intervene. The Deloitte report also suggested that the government needs to create a dedicated scheme “such as interest subvention and the Partial Risk Guarantee Fund mechanism”, with a proper budget allocation that can be the fuel for pilot projects in MSMEs.

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