According to reports, in order to improve execution of solar energy projects in the country, FICCI solar power task force has demanded that the government take steps in budget 2013 to make financing more attractive for its developers.
FICCI has stressed that the solar energy sector should be supported through interest subsidy on the loans which could be availed through the National Clean Energy Fund. In addition to that the solar energy sector needs to have access to long term External Commercial Borrowings (ECBs) at reduced rates.
At present, the industry is paying around 5% to hedge foreign exchange risk resulting in additional burden on the cost of the project. Government and banking sector should work towards developing solutions for hedging, FICCI said.
Besides, renewable energy sector should also be given priority sector lending status to promote both grid-connected as well as off-grid projects, it noted. FICCI also said that the government must provide payment security to solar energy sector.
Government offers a support of Rs 486 crore towards payment security mechanism. Despite that lenders are still wary about off-taker risk in the event of default including the payment capability of state electricity boards (SEBs) or discoms due to their weak financial health.