The Indian market in rooftop solar installations has been growing because of falling asset prices, beneficial changes in legislation, new financing arrangements and entrepreneurs.
Photovoltaic panels are now visible atop a greater number of buildings than ever before.
It is with this in view that the World Bank has recently signed a $650 million agreement with the State Bank of India (SBI) to discount loans.
These are expected to lead to the installation of more than 600 MW of rooftop solar power. The funds will be available at concessional rates of under nine percent.
The World Bank will essentially be pump priming the rooftop solar market to get it moving.
It is hoped that disbursal of $650 million in loans by a big public sector lender like SBI will provide the momentum needed to achieve commercial viability.
Apart from solar developers, SBI will be encouraged to lend to end-users like small and medium enterprises, which it might not have looked at otherwise.
An important aspect of the agreement involves capacity building.
While SBI is an experienced and sophisticated lender, it is new to the solar power market. The World Bank will be helping SBI orient itself to the needs of the market.
This is a new market which poses significant risks alongside a parallel market which already represents significant non-performing assets.