On May 30, the Asian Development Bank (ADB) and the state-owned Punjab National Bank (PNB) signed an agreement for a $100 million loan from ADB to finance large solar rooftop systems on industrial and commercial buildings throughout India.
The ADB funds will be used by PNB to make further loans to various developers and end users to install rooftop solar systems. The loan is guaranteed by the Government of India (GOI). PNB is the one of the largest banks in India, with a country-wide presence.
This is the first tranche loan of a $500 million multi-tranche finance facility, the Solar Rooftop Investment Program (SRIP), approved by ADB in 2016. The facility includes $330 million from ADB’s ordinary capital resources and $170 million from the multi-donor Clean Technology Fund (CTF) administered by ADB. The first tranche loan of $100 million would be financed entirely from the CTF. SRIP also includes a $5 million capacity development technical assistance, which would integrate the building blocks of GOI's sector development initiative to ensure a viable market demand.
India's National Action Plan on Climate Change, prepared in 2008, outlined existing and future policies and programs addressing climate mitigation and adaptation. Under the plan, the government launched the Jawaharlal Nehru National Solar Mission (JNNSM) in 2010 to add 20 GW of grid connected solar energy by 2022.
In July 2015, a revised JNNSM proposal, to increase the original 20 GW solar energy target to 100 GW by 2022, including 40 GW of rooftop solar energy generation, was approved by the Union Cabinet. This solar power capacity would contribute towards India’s Intended Nationally Determined Contributions (INDC) under the Paris Agreement of achieving about 40 percent cumulative electric power installed capacity from nonfossil fuel based energy resources by 2030.
SRIP is aligned with these national targets. The dedicated debt financing through the facility at PNB would help India meet its 2022 target of 40 GW solar rooftop capacity.
The entire Solar Rooftop Investment Program will cost $1 billion and the projects financed under the program will install solar rooftop system of around 1 GW capacity. It would also provide associated institutional capacity and market development support, resulting in a pipeline of bankable subprojects. This will facilitate India's transition to a low carbon economy and contribute to the climate change goal of reducing greenhouse gas emissions by 441,700 tons of carbon dioxide equivalent annually, or about 11 million tons of carbon dioxide equivalent over the typical 25-year lifetime of rooftop solar systems.
India’s solar rooftop market is expanding fast with an estimated total capacity potential of 124 gigawatt (GW). Around 5,525 MW solar power generation capacity was added during the last fiscal year, resulting in a cumulative solar capacity of 12.3 GW. There are plans to add 5,000 MW of rooftop solar and 10,000 MW from large scale solar power projects during the current fiscal.
Kenichi Yokoyama, ADB Country Director in India who signed the loan on behalf of ADB said, “With a sharp drop in the price of solar panels, India has a huge potential to expand its use of solar rooftop technologies. The program will contribute to the government’s plans to increase solar power generation capacity and also help India meet the carbon emission reduction target in line with its commitment at the recent global climate change agreement.”