India’s Solar Leap: Financing a Mature Market

Solar PV is currently experiencing high growth in India and the country has become the third largest solar market globally. Driven by cost competitiveness, solar is now the preferred choice for new power plants by the federal and most state governments. Access to large amounts of capital is essential for the market to maintain its momentum. The report shows that the financing ecosystem in India is stepping up to meet the needs of the market.

Insights from the report



As the solar market has grown, local, commercially-driven capital has stepped up. This has tilted the financing landscape in favor of domestic Indian sources, which in 2016 contributed more than 85% of financing.



Indian solar market lenders are some of the most active financiers in the market with deep relationships with domestic industrial conglomerates and specialized solar financing teams. A number of Indian power sector majors have been the early equity investors and continue to lead in the market.



With over INR 210 billion (Euro 3 billion) of debt financing lent by Indian banks to solar projects just in 2016, solar has evolved from a fringe infrastructure asset class to a mainstream option for both domestic public and private sector banks.




Kenya: The World’s Microgrid Lab

Kenya shows that the global microgrid market is ready for significant private investment. While there still remain some challenges – especially around the regulatory framework and aggregation of projects – there are now enough businesses with viable business models to provide early stage, strategic or even crowd investors with commercially attractive opportunities. The medium-term growth potential for the microgrid market in Kenya, as well as in other energy access markets including in Africa, South and South-East Asia, is very high.


Insights from the report



For many of Kenya’s 48 million inhabitants, access to electricity is still a distant pipe dream. Only about 20% have access to grid power 7. This is a stunningly low number, especially when compared to the 88% of people registered as mobile phone users.



Investment costs can vary widely depending on a variety of factors such as the remoteness and accessibility of the site, availability of materials and labour, the cost and ease of securing land and permits and local perceptions of the services being offered. Costs will also vary according to the standard to which the infrastructure conforms; strict safety and compatibility standards to ensure later grid compatibility, for ex- ample, will be more expensive than the infrastructure set up by informal local grid operators.



Under the right conditions, there is a valid business case.