A survey finds lack of low-cost financing, awareness and rooftop aggregation models are the barriers these enterprises face in switching to the renewable energy source
All micro, small and medium enterprises (MSMEs) will have to compete with large entities that have robust credit profiles to adopt rooftop solar, says a report published by Deloitte and Climate Investment Fund (CIF) on April 3, 2019.
The report, titled ‘Scaling up rooftop solar in the SME sector in India’, underlined few barriers the sector faces in switching to the renewable energy. They include lack of low-cost financing, awareness and rooftop aggregation models.
The Deloitte survey also highlighted that many MSMEs find it difficult to meet collateral requirements as their plant and machinery is already committed to other term loans. Many of them reported issues including high interest rates, lengthy processing time for loans and extensive documentation.
Also, most of the MSME owners are unaware of rooftop solar schemes and financing options. For instance, in the paper industry 78 per cent enterprises don’t know of this, 76 per cent in textiles, 84 per cent in plastics, and 76 per cent in pharma.
“Limited access to finance, need to strengthen awareness, and escalating energy expenses are impacting the long-term profitability, competitiveness, and sustainability of the sector. However, it presents great opportunity, and a multi-pronged approach involving supportive regulations, risk-bearing financing, and awareness building is needed to demonstrate viability and help scale up rooftop solar in the sector,” says Abhishek Bhaskar, energy specialist, CIF.
The survey covered 150 MSMEs across six clusters in Hyderabad, Ahmedabad, Gurugram, Chennai, Jaipur and Thane. They were identified based on average electricity consumption, concentration and composition of MSMEs, scale and volume of operations profitability and geographical spread.
The enterprises surveyed deal with rubber and plastic products, pharmaceuticals, auto components, paper and paper products, food products and beverages and textiles.
India has set an ambitious target to achieve an installed capacity of 40-GW rooftop solar by 2022 and only 1.44 GW has been achieved till December 2018. Currently, this market is mainly driven by power purchase agreements with large industrial and commercial entities.
Achieving the target will require bringing segments such as MSME and residential consumers to the forefront. Even in this segment, Ministry of New and Renewable Energy has been supporting residential consumers by way of capital subsidy, says the report.