Development banks to withdraw support for India’s PV sector

The US Government-sponsored banks that have helped fund the takeoff of India’s fledgling

solar industry may soon move to withdraw their support, according to an official at the

Overseas Private Investment Corporation (OPIC).

Peter Ballinger, OPIC’s director, has said that the agency is rapidly approaching its

lending limit for PV projects in India and opined that multilateral lenders like the Asian

Development Bank (ADB) and the World Bank (WB) could shortly be forced to reassess their

aid packages.

The ADB, WB and OPIC were among the first to invest in developing solar in India. However,

such has been the success of the investment programme that projects in the country now

account for 8.5% of OPIC’s total loan book, nearing its 10% limit for any one country.

India hopes to complete its first round of large-scale PV installations by January, and is

planning to hold an auction for a further 350MW of projects later this month. In October

Moser Baer installed India’s largest system to date, a 30MW system in the state of Gujarat,

and national capacity now stands at 125MW.

Ballinger believes that, with the industry maturing, the time is right for development

banks to start withdrawing support. “We’re supposed to be catalytic for new industries by

providing financing at an early stage until more traditional lenders get comfortable with

the risks of new technologies and businesses they’re unfamiliar with,” he said. “It may be

time for commercial banks to step in to India’s solar sector now that it appears to be

ramping up."