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Tax free bonds upto Rs 2000 crores for IREDA to support solar


That’s some good news I read earlier today for the solar sector financing.

Indian Renewable Energy Development Agency (IREDA) will raise Rs 2000 crores through tax free bonds

This is a part of the central government’s overall support plan for solar, under which the central ministry plans to raise Rs 5000 crores under tax free bonds. Of this, IREDA will be allotted Rs 2000 crores, said Tarun Kapoor, Joint Secy, MNRE.

It is not fully clear on how exactly the Rs 2000 crores thus mopped up by IREDA will be utilized. But the Joint Secy also mentioned that some of these will be used to provide soft loans at 10.5% to rooftop solar installations. Well, that is good news but perhaps not the best of news. Because, the sector that really needs soft loans is the MW Scale Solar sector.

In rooftops, I reckon the soft loans will be more relevant to the medium and large scale installations (50 kW and above), as for small scale systems, the capital cost does not really pinch that much. In fact, for quite a few of the commercial/industrial rooftop solar installations that EAI through its division Solar Mango provided project assistance, the promoters actually put in 100% equity for the rooftop solar (and we are talking about capacities upwards of 25 kW in these cases).

Will wait and see whether there will be allocations from the Rs 2000 crores to the MW Scale sector too. Even assuming 1000 crores out of the 2000 crores are allotted for the MW scale sector, that would mean funding almost 300 MW of solar (as the debt component of a 1 MW solar power plant is about Rs 4 crores). A number of small and medium solar power plant developers (implementing 1-3 MW) could benefit from this.

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Narasimhan Santhanam

Thank you for reading this post – hope it was helpful. You can connect with me at narsi@solarmango.com . My detailed profile here and my LinkedIn profile here

Posted in: Energy Finance, Rooftop Solar, Solar Photovoltaic

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