World Bank approves $165m to support India’s residential sector to adopt rooftop solar systems


World Bank | Updated: 29-06-2022 15:44 IST | Created: 29-06-2022 15:44 IST
World Bank approves $165m to support India’s residential sector to adopt rooftop solar systems
These solar photovoltaic (PV) installations will provide clean, renewable energy, and reduce greenhouse gas emissions by displacing generation based on fossil fuels. Image Credit: Flickr

The World Bank Board of Executive Directors today approved $165 million in additional financing to support India’s residential sector to adopt rooftop solar systems and make solar energy more affordable. These solar photovoltaic (PV) installations will provide clean, renewable energy, and reduce greenhouse gas emissions by displacing generation based on fossil fuels. The project is projected to reduce greenhouse gas (GHG) emissions by 13.9 million tons.

“India’s power sector is a key contributor to air pollution and carbon emissions and represents about half of the country’s total energy-related CO2 emissions. It is imperative to decarbonize the power sector by significantly increasing the use of renewable energy,” said Hideki Mori, the World Bank’s Acting Country Director for India. “This additional financing will increase India’s installed capacity of grid-connected rooftop solar and help India towards its goal of sourcing 50 percent of its energy needs from renewable sources by 2030.”

India currently ranks fifth globally in terms of annual solar power generation. However, significant land area is required to set up renewable energy plants, particularly the large-scale ground-mounted solar power projects. The government therefore is looking to increase the country’s rooftop solar capacity.  

The World Bank has been supporting the Government of India’s program to generate electricity from rooftop solar since 2017 with financing of $648 million for the Grid-Connected Rooftop Solar Program that focuses mainly on commercial and industrial rooftop PV systems. With this lending, users can generate clean, reliable energy for their own use and feed surplus electricity into the national grid. The additional financing will help scale up and expand the Program to cover the residential sector and support the government’s target of 40 gigawatts (GW) of solar rooftop installations.

India is committed to supporting growth of rooftop solar in the country, particularly in the residential sector. Most residential consumers pay less for electricity than commercial or industrial consumers and therefore have less incentive to shift to rooftop solar. Absence of affordable financing and innovative business models and high up-front capital cost exacerbates this challenge.

The additional financing will directly finance 450 MW of rooftop solar capacity in the residential sector. Importantly, the project will provide concessional financing to developers and residential consumers and mobilize additional private capital. It aims to mobilize $71 million of private capital, in addition to the $151.61 million that has been mobilized so far.

“The Program will help make rooftop solar affordable to residential consumers and catalyze a market with significant potential. It will help citizens and ordinary people take charge of contributing to a less warm world by participating in the energy transition revolution that is taking shape in the country,” said Amit Jain and Mani Khurana, task team leaders of the project.

Electricity distribution companies (DISCOMs) directly engage with residential consumers and play a vital role in the expansion of grid-connected solar. The project will support DISCOMs in identifying groups of residential customers, optimal locations to install the solar rooftops and battery energy storage systems, and appropriate business practices that will in turn help the utilities.

The additional financing includes a $150 million loan from the International Bank for Reconstruction and Development (IBRD), and another $15 million from the IBRD Fund for Innovative Global Public Goods Solutions.

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