Financers, Bankers and Economists Discuss Measures to Improve Financing for Renewable Energy Projects; Laud India’s Achievements in Renewable Energy
The panel discussion had representation from World Bank, International Energy Agency, Germany’s KfW, Citigroup, and leading Indian companies Power Finance Corporation (PFC), Rural Electrification Corporation (REC), Yes Bank and Indian Renewable Energy Development Agency (IREDA).
In the session, Director (Projects), Power Finance Corporation Shri Chinmoy Gangopadhyay said, “We are trying to look at solar energy projects from the angle of their long term viability. As there are very little entry barriers in the solar business, so everyone has entered and promoters try to move out in a few years. This sometimes creates difficulty in assessing the viability of projects.”
“There are also issues with regard to the quality of solar panels. There is no benchmark to assess the quality of solar panels. Suppliers who are tier one today, fall out of that position later and there is difficulty in ascertaining quality,” Gangopadhyay added.
Solar energy projects have been discovering tariffs much lower than grid prices. Experts in the panel discussion said they feel these low prices would affect the long term viability of solar energy projects. Michael Eckhart, MD and Global Head of Environmental Finance and Sustainability, Citigroup, offered a solution to this problem. “To ensure the long term viability of solar energy projects, in Argentina, in Mexico, and everywhere else, including in India, I am recommending that there be two parameters for procurement of solar energy – the lowest cost, and a debt service ratio, a measure of how financially viable is a project, at that price (of solar energy). What I fear is that with all these low price bid procurements of solar energy, five to ten years from now we will have a wave of project refinances,” Mr. Eckhart said.
Eckhart congratulated India on the policy initiatives that the country has taken, and the nimbleness of policy shown here, to ensure the holistic development of the solar energy sector. “India’s UDAY program for refinancing energy utilities is the perfect model for the world to follow. I really think India is becoming a model for the world in renewable energy. I have recommended to the ISA to prepare a case study on what India has done in renewable energy and educate the world,” Mr. Eckart said.