The World Bank has approved a $625 million loan to help India build 400MW of grid-connected rooftop solar plants across the country.
The Indian government will also receive a co-financing loan of $120 million on concessional terms and a $5 million grant from the Clean Technology Fund (CTF), one of the two Climate Investment Funds (CIFs).
CIFs, of which the World Bank is the trustee, were established in 2008 to help developing countries pilot low-emissions and climate-resilient projects.
The rooftop solar programme will be implemented by India's central bank, which will on-lend the funds disbursed by the World Bank to solar developers, aggregators and end users who wish to invest in commercial and industrial rooftop solar systems.
The country's overall potential demand for rooftop solar stands at about 124GW, according to the World Bank.
The lender believes that rolling out rooftop facilities has so far been proven difficult due to the lack of financing and low awareness of the technology. “Until now, those that wanted to install solar rooftop systems had to pay the full cost up-front,” the World Bank said in a statement.
The programme will support a number of solar business models such as third-party ownership, leasing, rooftop rental as well as direct end-user ownership.
“India is endowed with huge solar energy potential, and the World Bank is strongly supportive of the government’s plans to harness this potential and increase India’s solar capacity to 100 GW,” said Onno Ruhl, India director at the World Bank. “This project will support this target by providing financing to some of the 40 GW of solar which will be placed on rooftops.”
At present, India is one of the lowest per-capita consumers of electricity in the world, with over 200 million people unconnected to the grid. Those capable of accessing the network also face frequent disruptions.
Rooftop solar is one of the solutions being contemplated to address the problem, and multilateral lenders are not the only investors currently eyeing the sector.
Last August, New York-based infrastructure fund manager I Squared Capital invested in Amplus Energy Solutions, an Indian distributed rooftop solar power operator. Last month, the company formed a partnership with Walmart to provide rooftop systems with a combined capacity of 5MW on the retailer's wholesale outlets across the country.
ReNew Power Ventures, another Indian developer, is currently working on a pipeline of more than 1GW of renewable projects that includes rooftop solar facilities. The company is backed by the Abu Dhabi Investment Authority, Goldman Sachs and Global Environment Fund.