Professional Documents
Culture Documents
Technical Manual
for
Banks & FIs
on
Grid-Connected Rooftop Solar Power
Prepared for
Ministry of New and Renewable Energy,
Government of India
Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Contents
List of Figures ....................................................................................................................................... iv
List of Tables ......................................................................................................................................... v
How to use this manual ........................................................................................................................1
Context ....................................................................................................................................................2
Explaining grid-connected rooftop solar PV systems ......................................................................3
What is m eant by a grid -connected rooftop solar PV system ?.................................................3
What are the relevant qu ality stand ard s and benchm arks? .....................................................6
What are the gu id elines for d esigning a grid -connected rooftop solar PV system ? ...........10
What are the O&M asp ects of a grid -connected rooftop solar PV system ? ..........................12
Bu siness m od els ............................................................................................................................16
Central and State policies ...................................................................................................................17
On-going schemes and programs......................................................................................................18
Financial and economic analysis .......................................................................................................19
What is the stand ard p roject life of a grid -connected rooftop solar PV system ? .................19
What are the p roject lifecycle costs of a grid -connected rooftop solar PV system ? ............19
What is the typ ical p ayback p eriod for grid -connected rooftop solar PV p rojects? ............21
What are the risks involved in lend ing to a grid -connected rooftop solar PV p roject? ......22
Annexure 1: General project development process for grid-connected rooftop solar PV
projects in India ............................................................................................................................26
Annexure 2: List of State Nodal Agencies (SNAs) ..........................................................................28
Annexure 3: Frequently Asked Questions .......................................................................................29
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
List of Figures
Figu re 1: Break-u p of the 100 GW solar p ow er target set by the Governm ent of Ind ia for 2022 .............. 2
Figu re 2: Illu strative exam p le of PV m od u les as p art of a grid -connected rooftop solar PV system ....... 3
Figu re 5: General w orking schem atic d ep icting energy flow in a grid -connected rooftop solar PV
system .......................................................................................................................................................... 5
Figu re 6: Typ ical hou rly solar generation u nd er clear -sky cond itions ....................................................... 14
Figu re 7: Typ ical energy losses in a grid -connected rooftop solar PV system .......................................... 14
Figu re 8: Typ ical annu al energy generation trend over p roject life ............................................................ 15
Figu re 9: Illu strative PVSYST rep ort for norm alized energy generation for a PV system ...................... 16
iv
List of Tables
Table 1: Qu ality stand ard s and certifications for a grid -connected rooftop solar PV system ................... 6
Table 2: Com m only u sed softw are for PV system d esign ............................................................................ 12
Table 3: General assu m p tions for estim ating generation from crystalline silicon PV m od u les ............. 15
Table 4: Key featu res of CAPEX and PPA -based bu siness m od els............................................................. 16
Table 5: Direct and ind irect incentives offered by Governm ent of Ind ia ................................................... 17
Table 6: Typ ical Cap ital Cost breakd ow n for a grid -connected rooftop solar PV system ....................... 19
Table 7: General assu m p tions u sed in financial analysis of grid -connected rooftop solar PV p rojects . 20
v
How to use this manual
This m anual has been prepared w ith the intent to sensitize banks and FIs to the relevant
technology and project-related aspects of grid -connected rooftop solar pow er projects in
ord er to provid e guidance in the evaluation of project loan applications. The m anual
d iscusses, am ong other topics, the d ifferent components of a grid -connected rooftop solar
pow er system and its w orking; the relevant quality stand ard s and benchm arks for projects;
an overview of the fiscal and financial incentives for m arket grow th; the typical energy
generation patterns and perform ance m onitoring norm s; recom m ended system d esign
guid elines; the prevailing business m od els; and the salient technology - and project-related
risks for lend ers.
1
Context
In January 2010, the Governm ent of India launched the Jaw aharlal N ehru N at ional Solar
Mission (JN N SM) as part of its N ational Action Plan on Clim ate Change (N APCC) and set
out a target to achieve 20 GW of grid -connected solar pow er by 2022. This target w as revised
to 100 GW by 2022 in late 2014. Of this, 40 GW has been targeted through grid -connected
rooftop solar PV (full 100 GW break-up show n in Figure 1). The market potential of rooftop
solar pow er in India has been estim ated at 124 GW in a recent stud y by TERI 1. While 40 GW
is a highly am bitious target, it is attainable through concerted efforts on the part of the
d iverse stakeholder segm ents involved , viz. banks, system integrators, project d evelopers,
state agencies, d istribution utilities, etc. H ow ever, a host of challenges exist in the w ay of
reaching unrestrained participation from these stakeholders, and it is essential to ad d ress
their individ ual and shared concerns in ord er to achieve the goal. Participation of the
banking sector is absolutely key to forw ard progress. To enable that, tw o actions are
essential: (i) the concerns of banks in lend ing to grid -connected rooftop solar PV projects
need to be ad d ressed , and (ii) the banks m ust them selves be sensitized to the technology and
other project-related subjects. Issues expressed by banks particularly includ e lack of clarity
and und erstand ing of the system as w ell as the associated risks. This m anual is d esigned as
an inform ative guid e for banks & FIs to im part a w orking know led ge of grid -connected
rooftop solar PV systems and the associated project risks, in ord er to aid the banks in the
evaluation of loan applications for such projects. This m anual includ es a general d escription
of the system , its com ponents, its w orking, supporting policy fram ew ork, on -going
governm ent schem es & program s, approaches to estim ate the pow er generation and the
various cash flow s, and associated risks.
Figure 1: Break-up of the 100 GW solar power target set by the Government of I ndia for 2022
2
Explaining grid-connected rooftop solar PV systems
What is meant by a grid -connected rooftop solar PV system ?
A solar photovoltaic (PV) system is a renew able energy pow er generation technology that
uses photovoltaic m odules to generate electricity d irectly from solar rad iation, using a
phenom enon called the photovoltaic effect. The electricity generated can be stored , used
d irectly, or fed back into grid . Solar PV is a reliable and clean source of electricity that can
suit a w id e range of pow er generation applications for resid ential, ind ustrial, agricultural,
etc. consum ers. Som e com m on applications includ e solar generation for captive
consum ption, pow er sale and savings in electricity costs (by red ucing use of d iesel -generator
sets or d raw al from distribution utility). The technology has seen significant success for
pow er generation in recent years across the w orld, such as USA, Germ any, Japan, China, etc.
A grid -connected rooftop solar PV system refers to a solar PV system that is located on the
roof of a build ing and is connected to the local distribution grid . It is a form of d istributed
pow er generation . The general w orking of the system can be sum m arized below .
A grid -connected rooftop solar PV system includ es d ifferent com ponents that are selected
d epend ing on the system type, site location and application. In the Indian context, system
com ponents generally com prise of the follow ing com ponents: PV mod ules, m ounting
structures, inverter and BOS (m eters, junction box, cables, etc.). Batteries and tracking
m echanisms are usually not seen in grid -connected rooftop solar PV system s in Ind ia,
m ostly because of the high costs of these com ponents.
The m ajor com ponents of a solar PV system are:
PV Modules The PV m od ules
are the d evices that actually
convert solar energy to electricity.
PV m od ules are m ad e from PV
cells, w hich are m ost com m only
m anufactured u sing silicon; other
m aterials used includ e cad m ium
tellurid e (Cd Te), copper ind ium
gallium selenid e/ sulfide (CIGS).
Generally, silicon-based solar cells
provid e higher efficiency (15% - Figure 2: I llustrative example of PV modules as
20%) but are relatively costly to part of a grid-connected rooftop solar PV system
m anufacture, w hereas thin film
cells are cheaper but less efficient (5% - 10%). Since d ifferent types of PV m od ules
have d ifferent characteristics (in term s of efficiency, cost, perform ance in low
irrad iation levels, d egrad ation rate), no single type is preferable for all projects. Good
quality PV m od ules generally have a useful life of 25 to 30 years, although the
perform ance steadily d egrad es by about 20% over life tim e. It is im portant to assess
the quality of PV m odules for use in projects. There exist a num ber of quality
stand ard s d eveloped by international and national organisations for the testing and
certification of PV m od ules and their perform ance. These are d escribed later in this
section. Figure 2 depicts m ulti-crystalline PV mod ules in a grid -connected rooftop
solar PV system .
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
4
Figure 4: From left-to-right, a bidirectional (net) meter, an AC combiner
box, and an LT panel in a grid-connected rooftop solar PV system
Generate 1,51,800 kWh in a year and at 8 Rs/ kWh grid electricity cost, the
solar energy can potentially offset Rs 12,14,400 annually in utility bills;
Payback in 4-10 years considering a 15% subsidy on initial cost. H ow ever, the
system w ill last for over 20 years;
The solar output can be supplied to the grid if the SPV system produces in
excess of electricity requirement or w hen the building is vacant, thereby
earning revenue.
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Mandatory Advisory
Solar PV Modules/Panels
IEC 61215/ IS 14286 Design Qu alification and Typ e Ap p roval Yes -
for Crystalline Silicon Terrestrial
Photovoltaic (PV) Mod u les
IEC 61646/ IS 16077 Design Qu alification and Typ e Ap p roval Yes -
for Thin-Film Terrestrial Photovoltaic
(PV) Mod u les
IEC 62108 Design Qu alification and Typ e Ap p roval Yes -
for Concentrator Photovoltaic (CPV)
Mod u les and Assem blies
IEC 61701 Salt Mist Corrosion Testing of Yes -
(As ap p licable) Photovoltaic (PV) Mod u les
IEC 61853- Part 1/ IS Photovoltaic (PV) m od u le p erform ance Yes
16170 : Part 1 testing and energy rating : Irrad iance
and tem p eratu re p erform ance
m easu rem ents, and p ow er rating
IEC 62716 Photovoltaic (PV) Mod u les Am m onia Yes (As p er
(N H 3) Corrosion Testing site cond ition
like d airies,
toilets)
6
Mandatory Advisory
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Mandatory Advisory
8
Mandatory Advisory
N ote: Equivalent stand ard s m ay be used for d ifferent com ponents of the system s. In case of
clarification, the follow ing organizations/ agencies m ay be contacted :
Ministry of N ew and Renew able Energy (MN RE)
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
What are the gu id elines for d esigning a grid -connected rooftop solar PV
system ?
The d esign of a PV plant aim s at achieving the low est possible levelized cost of electricity. It
com prises id entification of load , sizing of system , and selection of suitable
technologies/ prod ucts. This in turn requires assessm ent of costs, pow er output, benefits /
d raw backs of technology type, quality, spectral response, perform ance at low rad iation
levels, nom inal pow er tolerance levels, d egrad ation rate and w arranty term s.
10
Selection of inverter includ es assessment of com patibility w ith mod ule technology,
com pliance w ith grid cod e and other applicable regulations, inverter-based layout,
reliability, system availability, serviceability, m od ularity, telem etry requirem ents, inverter
locations, quality and cost.
In d esigning the site layout, the follow ing aspects are im portant:
Choosing row spacing to red uce inter-row shad ing and associated shading losses
Choosing the layout to m inimise cable runs a nd associated electrical losses
Allow ing sufficient d istance betw een row s to allow access for m aintenance purposes
Choosing a tilt angle that optim ises the annual energy yield accord ing to the latitud e
of the site and the annual d istribution of solar resource
Orientating the m od ules to face a direction that yield s the m axim um annua l revenue
from pow er prod uction; as Ind ia is in the northern hem isphere, the m od ules w ill
usually be south-facing, although som etim es they are kept facing w est in ord er to
sync generation w ith evening peak d em and
The electrical d esign of a PV project can be split into the DC and AC system s. The DC
system com prises the follow ing:
Array(s) of PV m od ules
DC cabling (m od ule, string and m ain cable)
DC connectors (plugs and sockets)
Junction boxes/ com biners
Disconnects/ sw itches
Protection d evices
Earthing
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
With regard to PV system d esign, IEC has released a stand ard , the IEC 62548 PV arrays
Design requirem ents, w hich d oes not have an equivalent BIS stand ard at present. This
stand ard sets the d esign requirem ents for PV arrays, also includ ing DC array w iring,
electrical protection d evices, sw itching and earthing provisions.
What are the O&M aspects of a grid -connected rooftop solar PV system ?
Maintenance
Com pared to m ost other pow er generating technologies, solar PV system s hav e very low
m aintenance and servicing requirem ents. H ow ever, suitable m aintenance of a PV plant is
essential to optim ise energy yield and m axim ise the life of the system .
Sched uled m aintenance typically includ es:
Mod ule cleaning (d ust, bird d ropping and oth er d ebris can cause 5-10% d ecrease in
pow er generation)
Checking m od ule connection integrity
Checking junction / string com biner boxes
Therm ographic d etection of faults using Therm ographic cam era
Inverter servicing
12
Inspecting mechanical integrity of m ounting structures
Vegetation control
Tightening cable connections that have loosened
Routine balance of plant servicing / inspection
Com m on unsched uled m aintenance requirem ents includ e:
Replacing blow n fuses
Repairing lightning d amage
Repairing equipm ent d am aged by intrud ers or d uring m od ule cleaning
Rectifying supervisory control and d ata acquisition (SCADA) faults
Repairing m ounting structure faults
Manufacturers and d evelopers generally have set practices for PV system m aintenance, w ith
m any offering m ulti-year AMCs (Annual Maintenance Contracts); AMCs are m and atory for
d evelopers and system integrators that are empanelled w ith MN RE as Channel Partners
und er the Ministrys grid -connected rooftop solar PV schem e. AMCs m and ate that the
contractor shall carry out the required m aintenance activity (includ ing replacem ent of
equipm ent) insid e the guarantee period of the AMC (usually 2-5 years), w ithout any cost to
the custom er.
A typical AMC for a grid -connected rooftop solar PV system w ould include:
Pre-d ecid ed m aintenance sched ule
Supply of spare parts as required
Replacem ent of d efective m od ules, inverters, etc.
Maintenance of log sheets for operational d etail
Com plaint logging and its attending
Insurance (m achine breakd ow n insurance, general insurance covering fire,
earthquake, etc.)
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
these parameters. For more accurate calculations, softw are prod ucts are available that use
location-specific w eather d ata record s, PV m odule configuration (angle, orientation, etc.),
efficiency, losses, array d esign, cell tem peratures, inverter characteristics and so on. The
generic estim ations are useful in prelim inary project feasibility assessments, and are useful
since they provid e quick and easy estim ations. These estim ations provid e year -w ise
generation d ata in the project life; they cannot be used for m onthly/ d aily/ hourly generation
estim ates. H ow ever, these are d iscard ed for m ore accurate estim ations using specialized
softw are prod ucts in the d esign phase of the project. These d etailed estim ations require a lot
m ore d ata for obtaining the d esired generation estim ates, but they provid e very d etailed
generation estim ates as w ell, includ ing m onth-w ise, d ay-w ise and hour-w ise generation.
Energy generation calculation exam ples of both generic estim ations and softw are -based
sim ulations are provid ed in this section for reference by lend ers.
Generic estimation
Generic estim ations use a sm all number of param eters to give a rough approxim ation of the
generation perform ance of a PV system . These can be m ad e m ore realistic by incorporating
m ore param eters into the calculation. There are also d ifferent m eans of calculati on, using
d ifferent input param eters. Generally, the follow ing param eters are considered :
14
System size (in kWp or MWp)
Deration (%):
Deration refers to various factors in PV system s w hich cause pow er losses, includ ing
inverter loss, slight m anufacturing inconsistencies in m od ules, electrical
im ped ance/ resistance, tem perature, d ust and other environm ental conditions, aging
and m aintenance issues.
Peak sun hours (hours/ day):
Peak sun hours refers to the average hours of full solar rad iation (1000 W/ m 2)
received in a d ay at a location; this am ounts to an equivalent of the am ount of solar
rad iation actually received over the year
N o. of effective sunshine d ays in year (d ays/ year):
This refers to the num ber of d ays in a year for a location that can be assum ed to h ave
full solar radiation (1000 W/ m 2) for the peak sun hours d uration
Mod ule d egrad ation rate (%):
PV m od ules suffer from d egrad ation, d ue to a variety of reasons, over the prod uct
life, w hich causes the generation capacity per m od ule to d ecrease over tim e; this
d ecrease in generation is captured in an annual d egrad ation rate, usually about 0.2-
0.5%
These estim ates can also be used for project econom ic and financial analysis, such as
payback, NPV, etc. for the financial feasibility assessm ent of projects.
Table 3: General assumptions for estimating generation from crystalline silicon PV modules
1,200
loss
1,000
800
600
400
200
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Year
Figure 8: Typical annual energy generation trend over project life
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Figure 9: I llustrative PV SYST report for normalized energy generation for a PV system
Bu siness m od els
There are prim arily tw o business m od els for grid -connected rooftop solar PV projects:
CAPEX and PPA-based . Both business m od els have their m erits and d em erits; choice of
business m od el for a particular project d epends upon a num ber of factors, such as roof
ow ner priorities, d esirable operating conditions, profitability, etc. Table 4 lists som e of the
key features of both business m od els.
Table 4: Key features of CAPEX and PPA-based business models
CAPEX PPA-based
Project ow ned by roof ow ner/ consu m er Project ow ned by p roject d evelop er/ su p p lier
Roof ow ner/ consu m er resp onsible for O&M of Roof ow ner/ consu m er not resp onsible for O&M;
system after initial 1-2 year p eriod O&M is resp onsibility of p roject d evelop er
Can be converted into CAPEX at a p re-d ecid ed
Cant be converted to OPEX m od el at a later d ate
d ate (op tion to bu y back)
Pow er can be sold to roof ow ner;
Pow er to be u sed for cap tive consu m p tion;
Pow er can be sold to d istribu tion u tility;
su rp lu s p ow er can be sold to d istribu tion u tility
Pow er can be sold to third p arty**
16
**some state regulations do not permit this mode of operation; should be checked at the time of project
conception/planning
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Central Financial System Ow ner / Both Central and State Governm ents frequ ently
Assistance (CFA) as a Pow er Generator p rovid e su bsid ies on cap ital costs of solar p ow er
cap ital su bsid y on (Resid ential / p rojects throu gh variou s schem es and p rogram m es.
solar PV p rojects Institu tional /
Social consu m er)
In ad d ition to the policy push by the Central Governm ent, a num ber of State Governm ents
have also com e out w ith p olicies and regulations concerning grid -connected rooftop solar
PV pow er. So far, 15 states have released relevant policies and 21 states have released
regulations on grid -connected rooftop solar PV pow er.
18
4. Installation of Grid-connected Rooftop Solar PV Pow er plant w ith aggregate 73
MW capacity in Warehouses in various states across the country through N ational
Clean Energy Fund (N CEF):
The project size w ill range from 500 kW to 5 MW size. The projects w ill be
im plem ented in the w arehouses ow ned by various organizations like Warehousing
Corporation of Ind ia, Food Corporation of Ind ia, State Government Organizations
and som e private com panies w hich have huge vacant roof space and vacant land in/
around the w arehouses. SECI w ill be the nod al agency for MNRE for the
im plem entation of the schem e. Central Financial Assistance w ould total to Rs. 148.92
crores (USD 24.17 m illion) for the 73 MW of aggregate capacity ad dition in various
states across the country.
What are the project lifecycle costs of a grid -connected rooftop solar PV
system ?
Solar PV system s have a high upfront cost and low operational costs, d ue to there being no
fuel requirem ent or usage. For grid -connected rooftop solar PV system s, operational costs
are very low , as there is no need for battery replacem ent. Gene rally, operational costs for
grid -connected rooftop solar PV system s includ e general up -keep and m aintenance, inverter
replacem ent, and replacem ent of other BOS com ponents (m eters, junction box, cables, etc.).
Table 6: Typical Capital Cost breakdow n for a grid-connected rooftop solar PV system
PV m od u les 45-55%
Inverter 20-30%
Mou nting stru ctu re 15-20%
Other BOS (Ju nction box, cables, m eters, etc.) 5-10%
Table 6 show s the general breakup of the capital cost for a sm all-m ed ium sized grid -
connected rooftop solar PV project. The average capital cost for grid -connected rooftop solar
PV system s is ~ Rs. 80/ W p . With increase in system size, econom ies of scale may allow cost
red uction, d ow n to an average capital cost of Rs. 70-75/ W p . Generally, annual operational
costs are assum ed to be ~ 2% of the capital cost in m ost financial analyses.
Table 7 gives the general assum ptions used for the financial analysis of a grid -connected
rooftop solar PV system .
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
Table 7: General assumptions used in financial analysis of grid -connected rooftop solar PV projects
20
Major lifecycle costs in a grid -connected rooftop solar PV project generally com prise the
follow ing:
1. InitialCapital Cost
o PV m od ules
o Inverter
o Mounting structure
o Other BOS (Junction box, cables, m eters, etc.)
In large-sized projects, there m ight be a need for purchase of a transformer as
w ell, w hich can ad d to the cost.
o Site assessm ent and d evelopm ent cost
For sm all-m ed ium sized projects, site assessm ent and d evelopm ent costs are
not significant, since the PV system only need s to be procured , placed and
fixed at the selected positions as per d esign. H ow ever, for large-sized
projects, som etim es site assessm ent and d evelopm ent can become a
significant cost com ponent, such as in the case w hen roof extension or other
civil w ork is desired .
o Licensing
In som e projects, there m ight be a need to procure licenses for start of
com m ercial operation that has a stand ard cost.
2. Scheduled replacement costs
o Inverter replacem ent
Solar inverters generally have a life of ~ 10 years; although som e high quality
prod ucts m ay continue to function w ell for a few m ore years. After this
period , inverters need to be replaced .
3. O&M cost
Annual O&M costs are generally assum ed to be ~ 2% of the initial capital cost, w ith
an escalation rate of ~ 5.72% as per CERC after the first year of operation.
What is the typical payback period for grid -connected rooftop solar PV
projects?
A grid -connected rooftop solar PV system generally has a payback period of 6-8 years.
H ow ever, this is highly d epend ent on the business m od el of the project. Since there is not a
lot of variation in the cost structure of w ell-designed and im plem ented grid -connected
rooftop solar PV projects, the revenue m od el becom es very im portant in ascertaining the
projects financial health. For instance, states in Ind ia have their ow n policies and
regulations for grid -connected rooftop solar PV projects, such as Feed -in Tariff (FiT) and N et
Metering. The FiT as w ell as the tariff structure can vary as d ecid ed by the State Electricity
Regulatory Com m ission (SERC), w hich can lead to big differences in the financial viability
of grid -connected rooftop solar PV projects in d ifferent states. Also, other business m od els
such as those based on Pow er Purchase Agreem ents (PPAs) or roof leasing can have w id ely
d ifferent m echanisms for d eterm ining the financial viability.
It m ay be noted that m ost grid -connected rooftop solar PV project financing in Ind ia relies
on the financial health of the balance sheet of the project d eveloper as this red uces the risk
exposure of the lend ing institutions.
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
What are the risks involved in lend ing to a grid -connected rooftop solar
PV project?
There are various risks involved in lend ing project d ebt to a grid -connected rooftop solar PV
project. These can vary d epend ing upon the size of the project, state, etc. In this section,
these risks have been briefly explained and possible risk mitigation options explored .
Technology risks
Since the grid -connected rooftop solar PV ind ustry and the solar PV pow er ind ustry itself, is
relatively new and yet to m ature, there is som e risk in the selection of PV system
com ponents. PV m od ules have a prod uct life of 25 years, but the d omestic ind ustry itself
d oes not have a lot of experience w ith 25-years of operation of PV system s, includ ing the
lifecycle perform ance of PV m od ules and other system com ponents w ith respect to m od ule
failu re, perform ance d egrad ation, etc. This contributes to som e uncertainty in the projects
financial viability over the project life. Also, like in any ind ustry, there are a num ber of low -
quality prod ucts available in the m arket, w hich m ay hold the attraction of initial cost
red uction opportunities. Use of such com ponents ad d s to the technology risk in a project.
Technology risks can be m itigated to a large extent w ith a few m easures early on in a project.
These can be:
Careful screening of project experience of d eveloper/ prom oter
Usage of high-quality system com ponents from w ell-established m anufacturers
Statem ent of generation guarantee by the project d eveloper
It m ay be helpful to d evelop a list of preferred suppliers for reference in evaluation of loan
applications.
22
Poor financial health of d istribution utilities and poor enforcem ent of regulations put the
financial viability of the project at risk. Id eally, lend ers can avoid this risk by focussing
lend ing operations in states w ith a proven track record of paym ent by distribution utilities.
In PPA-based projects, apart from an in -d epth evaluation of the pow er purchasers
cred ibility, the specific term s and cond itions of the contract are also very im portant.
Security coverage
Grid -connected rooftop solar PV system s by them selves have untested and possibly low
resale value in the m arket, w hich m akes it d ifficult to use the PV system as security for the
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
project d ebt. There is also an uncertainty regard ing continued availability of the roof space
over the 25-year project life w ith no security interest. In ad dition, potential borrow ers m ay
have inad equate business assets for holding as collateral on the loan.
Table 8 illustrates some im portant characteristics of the risks d escribed here.
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Table 8: Brief analysis of technology and project-related risks
Probability of Magnitude of
Risks Possible Mitigation Measures
Occurrence Impact
Procu rem ent of equ ip m ent as p er qu ality stand ard s and sp ecifications
1. Technology risk Low Low
notified by MN RE (Technical Du e Diligence)
Verification of p erform ance p rojections w ith m u ltip le solar resou rce
2. Solar resou rce d ata risk Low Low d ata sou rces, inclu d ing site-sp ecific resou rce d ata, if available (Technical
Du e Diligence)
3. Pow er off-taker risk Med iu m H igh Carefu l screening of p ow er off-taker cred it history
4. Policy & regu latory u ncertainty Low Low Low reliance on p olicy and regu latory incentives for p roject viability
Carefu l screening of p roject d evelop er / p rom oter exp erience
5. Develop er / Prom oter risk Low Med iu m Evalu ation of p rop osed p roject (feasibility rep ort, ind ep end ent
consu ltant)
Debt servicing cond ition in term s of loan agreem ent in the event of
6. Theft and vand alism Low Low
theft or vand alism
7. Low cred it p rofile of borrow ers Med iu m Low Exp and KYC d atabase in com m ercial and ind u strial sectors
8. Secu rity Coverage Low Med iu m Determ ining alternate m eans of secu rity
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Annexure 1: General project development process for grid-
connected rooftop solar PV projects in India
The project d evelopm ent process for grid -connected rooftop solar PV projects in Ind ia d oes
not follow any established protocols/ proced ures, since the m arket is yet to m ature so not
enough project d evelopm ent has taken place, and there are a num ber of governm ent
schem es/ program s and im plem entation m od els w hich have d ifferent m od es of
im plem entation. H ow ever, there is a general set of stages that m ost project d evelopm ent
processes follow , w hich includ es (i) Project Planning/ Preparation, (ii) System Design, (iii)
Im plem entation, and (iv) Operation & Maintenance.
This set of steps has been illustrated to show the com m on aspects of grid -connected rooftop
solar PV project d evelopm ent in India. It is to be noted that the project d evelopm ent process
d escribed here is for the purpose of und erstanding only, and m ay differ from state -to-state.
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27
Annexure 2: Web links of State N odal Agencies (SN As)
State / Union Territory Website
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Annexure 3: Frequently Asked Questions
What is the rate of subsidy?
Accord ing to the latest notification by MN RE2, subsid y of 30% on Benchmark Capital Cost is
available for all consum ers (except for Com m ercial & Ind ustrial consum ers), includ ing the
follow ing consum er categories:
Institutional Schools, health institutions includ ing m edical colleges & hospitals,
ed ucational institutions (both private and public), R&D institutions, etc.
Governm ent Both Central & State Governm ents buildings covering all Governm ent
offices, Governm ent PSUs, all build ings ow ned by Gover nm ent d irectly or
by any Governm ent-ow ned societies, com panies, corporations or
organizations.
All Panchayati Raj build ings.
Governm ent organizations ow ned system s anyw here includ ing on private,
com m ercial and ind ustrial organizations w ill also be eligible.
Social Sector Com m unity centers, w elfare hom es, old age homes, orphanages, com m on
service centers, com m on w orkshops for artisans or craftsm en, facilities for
use of com m unity, any establishm ent for com m on use, etc.
It is to be noted that the subsid y w ill be ad m issible for the above categories even if the
pow er connection is classified und er ind ustrial or com m ercial category.
Private, com m ercial and ind ustrial buildings w ill not be covered und er this subsid y unless
the solar PV system is ow ned by a Governm ent organization.
What w ill be the process of subsidy; w ho w ill act as nodal agency for release of subsidy
and w hether any MOU has to be signed betw een the Bank and the N odal Agency?
MN REs inform ation notice id entifies the follow ing nod al agencies for subsidy
d isbursem ent:
State N od al Agencies (SN As), State Departm ents, SECI (Solar Energy Corporation of Ind ia),
IREDA (Ind ian Renew able Energy Development Authority), em panelled Governm ent
agencies, PSUs of Central and State Governm ent etc. and participating Banks.
There are m ultiple m echanism s for subsid y d isbursem ent that are currently operational.
These are d escribed below :
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Technical Manual for Banks & FIs on Grid-Connected Rooftop Solar Power
As of now , there is no requirem ent for a MoU to be signed betw een the Bank and the N od al
Agency.
What shall be the maximum loan limit for financing the rooftop PV equipment?
There is no m axim um loan limit specified by MN RE for grid -connected rooftop solar PV
projects. Generally, project loan w ill constitute 70% of project CAPEX. The Grid Connected
Rooftop and Sm all Solar Pow er Plants Program m e und er im plem entation by MN RE
specifies system sizes in the range of 1 kWp to 500 kWp on a single roof. Consid ering an
approxim ate cost of Rs. 75 / Wp for a 500 kWp project, the loan am ount for 70% of project
CAPEX could be as m uch as Rs. 2.8 crore.
Aggregator projects: In projects w here several roofs are aggregated to increase system size
(w hich gives opportunity to red uce per-Watt costs d ue to econom y of scale), aggregate
project sizes can reach 1 MWp or m ore. For exam ple, in the low -cost loan scheme recently
launched by IREDA 3 for grid -connected rooftop solar PV projects, aggregator -based projects
of m inim um 1 MWp size are eligible for loans covering 70-75% of project CAPEX. In the
sam e w ay as above, the loan am ount for a 1 MWp project m ay be as m uch as Rs. 5.6 crore.
For resid ential projects, system size generally d oes not exceed 10 kWp. Cons id ering an
approxim ate cost of Rs. 90 / Wp for a 10 kWp project, the loan am ount for 70% of project
CAPEX could be as m uch as Rs.6.3 lakhs.
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Whether the subsidy is upfront, if so, w hether loan is to be released after receiving
subsidy from the nodal agency
Subsid y d isbursal is generally d one in a phased m anner. As stated in the schem e d ocum ent
of the on-going Grid Connected and Sm all Solar Pow er Plants Program m e of MN RE 4,
release of fund s for subsid y d isbursem ent by financial institutions w ill follow the pattern
hereund er:
Up to 30% of the eligible CFA and service charges [shall be disbursed] at the time of sanction of the
proposal in the project/programme mode
Balance 70% [of the eligible CFA and service charges shall be disbursed] after successful
commissioning of the projects after sample verification on submission of requisite claims.
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Concerned divisions / project related brief note to be included here