Cement Energy and Environment

) a base price for the biddings. The huge discount is unviable. This is the biggest problem affecting entrepreneurs, said Rakesh Singhal, chief manager, State Bank of India Consultancy Services Cell. "Revenue model is not strong right now. Banks cannot be sure if they will get their money back at these tariffs," he added. No radiation data Banks require sound location-specific data of solar radiation to assess viability while giving loans. "For a financier, the challenge lies in sourcing reliable historical data to calculate ground radiation with precision. For each location and each state, forecasting is crucial to predict generation of solar power," said Pranav Sinha of Climate-Parliament, a Delhi– based non-profit. Sinha has collated a list of banks' concerns discussed at a workshop organised to find ways to arrange finance for solar mission projects. Banks have demanded an atlas for India to identify how much power a plant can generate under specific weather conditions Fund for R&D A fund of about Rs 3,000 crore was announced in the Union Budget (201 0-11) for research and innovative projects in clean energy technologies. The National Clean Energy Fund is expected to lead to technological breakthroughs that can reduce the capital cost and improve output of solar power plant. But the finance ministry has not issued the guidelines yet. A technological breakthrough is essential because as per the climate change action plan, the solar mission must bring the cost of solar power at par with cheap coal by 2015. Also, 15 per cent of the energy produced in India by 2020 must constitute renewable energy. and locations throughout the year. "There is no way to assess the risk as there is no precedence of successful profitable application. Compared to conventional power projects that have surety of return, the nature of solar projects is uncertain. That is why most private banks are not forthcoming in financing solar power projects," said an investment expert of a private bank, requesting not to be named. Unfeasible bank specifications In India, banks give loans only if the project's payback period is a maximum of 10 years. This may not be feasible for entrepreneurs because they require the assistance for a minimum of 11 years to make ventures viable as the life of a solar plant is 25 years. Moreover, the Reserve Bank of India (RBI) specifies norms on the minimum amount of cash available with a company at any time to pay instalments on loans. But bankers do not see solar power producers meeting the norm. Government help The Ministry of New and Renewable Energy (MNRE) has announced a dedicated fund of Rs 330 crore that will ensure payment of loan instalments even if entrepreneurs default. The Solar Payment Security Fund will ensure uninterrupted payment to banks, said a senior MNRE official. Solar power developers have contracted the NTPC Vidyut Vyapar Nigam Ltd under the mission. But this fund still awaits cabinet's approval. A ray of hope comes from the RBI. "Banks may get encouraged if RBI gives solar project a priority sector lending status," said a representative of a major private bank requesting anonymity. In reply to an e– mailed query, RBI spokesperson said the Central bank may give priority lending status to grid– connected solar power projects. But while RBI is working on it, financiers have reason to worry because of government's past records of repayment of loan amounts. "Our experience shows it is difficult to rely on government- funded schemes because bills are not cleared on time," he said. International support Lack of help in India has led some investors to seek international support. World Bank's arm International Finance Corporation has pledged US $300 million for development of renewable energy projects in India. A quarter of this amount is for the solar energy sector. "Two solar energy firms are in the process of getting into joint ventures with US energy companies to get finance. Financiers like US Exim may promote companies that have joint ventures with US companies by providing finance," a solar power producer said. Courtesy: Down To Earth, 1-15 March, 2011, Pp 22-23 SMALL US FIRMS TAP INTO INDIA'S SOLAR MISSION India's bid to increase solar power production is energizing the business of a number of small and medium-sized US firms that offer innovative equipment and technologies. Renewable energy firms such as Astonfield, Spire Corp. , and Suniva have bagged projects worth millions of dollars in recent years from India. Astonfield gets all its business from India. It recently won contracts to build three plants - an 11 :MW plant in 29