MSMEs can contribute 16 GW in meeting solar target


Union Minister of Micro, Small and Medium Enterprises (MSME) Nitin Gadkari has urged MSMEs to avail concessional debt finance to install rooftop solar.

There are 63.4 million MSME units spread across India. India’s highly ambitious solar target can be achieved only if rooftop solar adoption can be accelerated, especially among MSMEs.

“India has set a target of 175 GW of installed capacity by the end of 2022, out of which 40 GW is to come from solar rooftop projects. Out of 40 GW, 4 GW is to come from domestic solar rooftops, whereas 16 GW can be harnessed from MSMEs,” said Gadkari while speaking at a webinar.

There is a strong business case for MSMEs to install rooftop solar as they can achieve significant savings on electricity bills. Most SMEs spend 20% of their operating income on electricity. They pay INR 11/kWh as standard tariff for the grid electricity. In case of power failure, this is substituted by highly costly diesel power (INR 20/kWh). Solar rooftops can generate on-site solar power at almost half the grid tariff. Further, the payback period is less than four years for rooftop solar projects.

However, rooftop solar uptake among MSMEs is hampered despite the huge potential and commercial benefits. Primary challenges include lack of awareness, poor credit access (due to low to no credit ratings), and regulatory uncertainty.

Gadkari informed that the Ministry of Micro, Small & Medium Enterprises is working with the World Bank to bring in a credit guarantee mechanism to make financing accessible to unrated MSMEs in implementing rooftop solar projects. “Considering the rates of solar power from large utility power plants have come down to a record INR 1.99/kWh, MSMEs must leverage this opportunity to bring down their energy expenses,” he added.

Speaking at the webinar, State Bank of India (SBI) chairman said SBI is committed to financing 15 GW of viable renewable energy projects under its Solar Rooftop Financing Program launched in 2016 with support from the World Bank. As of January 2021, it sanctioned INR 17,422 crore for 290 ground-mount projects and INR 1858 crore for 288 rooftop solar projects covering a 545 MW capacity.

SBI has availed a $625 million line of credit from World Bank specifically for financing rooftop solar projects across the country through its identified branches. A countrywide customized financial product has been developed by SBI which covers 75% of the project financing requirement along with other favourable terms such as repayment period, moratorium, and security.


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