The World Bank has today pledged its biggest-ever solar loan to India following a meeting between the Indian Prime Minister and the World Bank president.
After Narendra Modi met with World Bank chief Jim Yong Kim Thursday, the World Bank confirmed that it will lend Indias National Solar Mission the record sum of $1 billion to help the country along the path towards 100 GW of solar capacity by 2022.
This latest stimulus builds on an already generous series of financial packages India has received from the World Bank. Between 2015 and 2016 the country has been lent some $4.8 billion, and it is believed that Modis vision for Indias clean energy transition convinced Kim to release further funds to enable the realization of this goal.
"Prime Minister Modis personal commitment toward renewable energy, particularly solar, is the driving force behind these investments," read a statement issued by Kim. "The World Bank Group will do all it can to help India meet its ambitious targets, especially around scaling up solar energy."
Modis plan for attracting investment into Indias clean energy transition has largely focused on appealing to private firms and investors, but the PMs office told the World Bank that Indias decision to consciously choosing to follow an environmentally sustainable path should be supported and recognized, as should other countries.
The National Solar Mission is part of Indias wider aim to source 40% of its power from renewables by 2030. Currently, India has more than 7.6 GW of solar PV installed and a pipeline of 22 GW either under construction (~ 13 GW) or at the Request for Proposal (RfP) stage (~ 9 GW) according to recent data from Mercom Capital Group.
However, despite this encouraging progress, there have been concerns over financing such growth, and whether it can be maintained. Challenges include the often-poor finances of state distribution companies that are forced to sell subsidized power, lack of access to affordable capital as lenders shy away from the increasingly low bids being seen in auction, and too much risk being borne by developers rather than the government.
Yet, despite these roadblocks, international investment has been steady in recent months, with the likes of Trina Solar, Foxconn of Taiwan and Finnish firm Fortum all investing heavily in Indias solar market. Further, Germanys KfW development bank has pledged to offer 1 billion in low-interest loans over the next five years to help support Indias small but growing distributed solar sector.