Reduction in accelerated depreciation tax benefit to hit renewable energy sector
The renewable energy sector, especially wind energy, is suffering because of the reduction in accelerated depreciation tax benefit as announced in the Budget,Upender Tripathi Secretary, Ministry of New and Renewable Energy, told The Hindu in an interview. He said the government is looking into why foreign banks have not been lending to solar projects in the country though public sector banks have been enthusiastic and private banks are beginning to show interest.
Private banks are not lending to solar projects. What is the reason?In RE-Invest 2015, we got a huge response from the banks — private, public and multilateral. For example, the World Bank has given $500 million to SBI to lend to aggregators in rooftop solar. ADB is in the pipeline to give $500 million for rooftop solar to Punjab National Bank. And we have got $1 billion from KFW, the German bank.Many banks think these are risky projects. That perception is still there but increasingly it is changing. If you look at investment, each MW of solar costs Rs.5 crore and this current financial year we have already put 2,500 MW of solar. A cumulative of 5,000 MW of solar has been crossed now in solar alone.YES Bank, which is a small private bank, has not only given a large loan for renewables they have also come out with $500 million of solar bonds, what they call green bonds. Exim Bank has also come out with green bonds. There has been a big impetus because to get the 175 GW by 2022, you need around $200 billion of investment, equity and loan put together.