Harnessing Solar energy, Options for India

2.1.1. Recommendations
Solar lighting systems should be given high priority to provide lighting in un-electrified or
electrified villages, and in urban areas. Soft loans and capital subsidies should be provided to
entrepreneurs, manufacturers and service providers.
The indicative cost of `300 per W p is too low for small systems where the proportion of costs
on balance of systems is higher. This inadvertently disadvantages the poorest customers and
supports low quality systems. A National Bank for Agriculture and Rural Development
(NABARD) circular a stipulates that the borrowers are required to bring in 20% of the costs.
Down payment requirement should be removed for loans towards solar lighting systems,
and in their place the capital subsidy should be considered.
As the maximum loan amount is 50% of the indicative costs, purchasing higher cost (better
service and better quality) systems is made difficult. Furthermore, there should be more
flexible loan terms for low-income households. The stipulation for a minimum lock in period
of three years should be removed.
In the case of solar lighting systems, the framework for supporting local entrepreneurs that
set up central charging stations (CCS) rental services is currently unclear. Governmental
recognition of this model with a mandate on appropriate working capital loans could be
effective for greater distribution of lanterns.
A generation-based incentive in lieu of or in addition to reduced capital subsidy should be
considered for rural microgrids (for 10 kW p or more) solely based on solar energy or
hybridised with other renewable energies. This will ensure sustainable operation of the
plants and enable the economic analysis of different subsidy regimes.
Clear guidelines to develop methods of monitoring applications and ensuring ongoing
operations should be planned.
Merits and demerits of capital subsidies should be carefully weighed. Financial incentive
schemes suitable to the end-users of different categories should be worked out carefully.
Furthermore, capital subsidies should not be tied to specific models as is the case now, since
this is likely to stifle innovation.
The Reserve Bank of India should prioritise lending for solar solutions in the case of lanterns
and home lighting systems. Microgrids based on hybrid solutions, solar and other renewable
energy sources should also be targeted. Rural regional banks should be extensively involved
in channelling these loans.
2.2. Solar-PV-based Irrigation Pump Sets
These pumps are found to be competitive at today’s cost relative to diesel pumps based on cost per
unit of electricity. Detailed analysis is provided for pumps of two sizes – 1HP and 2 HP – necessary to
draw water from up to 230 ft and up to 530 ft respectively.
2.2.1. Recommendations
The government must sponsor techno-economic studies that provide a comprehensive
understanding of the losses incurred in using the flat-rate schemes and in providing subsidised
grid electricity to farmers for irrigation. This study must take into account the losses incurred in
the use of inefficient pumps, T&D losses in grid extension, theft of power, etc. Studies also must
be carried out to determine the ratings of irrigation pumps in use to enable more informed
a NABARD Circular No. 199 /DPD-NFS/ 04, dated November 1, 2010.
http://www.nabard.org/pdf/Eng%201%20solar%20circular-01-11-10%20with%20encl.pdf
Executive Summary CSTEP | Page 14