Developing solar projects can get cheaper by 20 basis points if the Reserve Bank of India’s decision to cut interest rates by 50 basis points is transmitted to the ground by the banks.

The financing cost for solar power developers has already come down to 11.25-12.25 per cent as compared to around 13.5 per cent around four years ago, according to PTC India Financial Services, a non-banking finance company which focuses on lending to the renewable sector.

“To begin with the finance cost for solar used to be around 13.5 per cent in 2011-12. Today, that has come down to 11.25-12.25 per cent. For some established players, it can even go below 11 per cent. But the recent announcement if implemented will reduce it by 15-20 basis points,” said Ashok Haldia, CEO and Managing Director, PTC India Financial Services.

PTC India began lending to the renewable energy sector in 2009-10 and within six years the sector makes up for about 46 per cent of its portfolio. Despite the weakening global commodity prices, which have brought down the rates of conventional fuels, Haldia remains bullish on renewable energy.

Already in the first half of the fiscal, the company has sanctioned ₹ 2,750 crore, primarily for renewable energy projects. Out of the total 50 projects it has financed, almost a third, or 15, were in 2015-16 alone.

Asked about the risk of falling commodity prices on the renewable energy sector, Haldia said, “The projects which have already been funded have power purchase agreements with distribution utilities. Third-party risk to that extent is covered.” PTC India Financial Services, which committed to funding 6,000 MW of renewable energy projects at Re-Invest 2015, remains confident of meeting that target.

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