A Design Case Study for The U.S. – India Catalytic Solar Finance Program

The document identifies a critical gap in India's goal to achieve 40 GW of rooftop solar by 2022, noting that as of March 2018, capacity was only ~2.53 GW. It argues that while the Commercial and Industrial (C&I) segment is growing, expansion is limited to high-credit entities, leaving MSMEs underserved due to a lack of credit history and collateral. To address this, the authors propose a Credit Guarantee Mechanism (CGM) as a bilateral loss-sharing agreement between a trust fund and lending institutions. This mechanism would provide a Liquidity Backstop Pool for payment delays and a Partial Loss Guarantee Pool for defaults, effectively reducing the risk for banks lending to Renewable Energy Service Companies (RESCOs). The study estimates that $1 million in donor grant capital could mobilize $14 million in capital and install 18 MW of capacity.

• India's progress toward its 40 GW rooftop solar target by 2022 was significantly behind as of March 2018, with installed capacity at approximately 2.53 GW, requiring a compound annual growth rate of about 100% to meet the goal.
• The rooftop solar market in the Commercial and Industrial (C&I) segment is reaching a plateau because financing is primarily available to large corporates and high-credit rated entities, excluding Micro, Small and Medium Enterprises (MSMEs) who lack credit benchmarks and collateral.
• Lenders are reluctant to finance Renewable Energy Service Companies (RESCOs) that sign Power Purchase Agreements (PPAs) with MSMEs due to two primary risks: payment delays caused by cash flow variability and payment defaults resulting from the off-taker's lack of creditworthiness.
• The proposed Credit Guarantee Mechanism (CGM) is designed as a bilateral loss-sharing agreement that covers 50% of uncovered losses, consisting of a Liquidity Backstop Pool (capped at 5% of uncovered losses) for delays and a Partial Loss Guarantee Pool (45% of uncovered losses) for defaults.
• Financial modeling indicates that $1 million of donor grant capital invested in the CGM fund can enable $14 million of capital mobilization and the installation of 18 MW of rooftop solar capacity.
• To mobilize 10 GW of capacity in the rooftop C&I segment, the study estimates a required CGM fund of US$ 412 million, split between a US$ 56 million Liquidity Backstop Pool and a US$ 356 million Partial Loss Guarantee Pool.

APA

Singh, V. P., Bagaria, R., Nirmal, V., Khandelwal, A., Purkayastha, D., Bhatt, U., & Shrimali, G. (2018). A Design Case Study for The U.S. – India Catalytic Solar Finance Program. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/Credit-Support-Pathways-for-Rooftop-Solar-Projects-in-India.pdf

Chicago

Singh, Vaibhav Pratap, Resham Bagaria, Vijay Nirmal, Aparna Khandelwal, Dhruba Purkayastha, Upendra Bhatt, and Gireesh Shrimali. A Design Case Study for The U.S. – India Catalytic Solar Finance Program. Climate Policy Initiative, 2018. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/Credit-Support-Pathways-for-Rooftop-Solar-Projects-in-India.pdf.

Wikipedia

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BibTeX

@techreport{singh2018design, author = {Singh, Vaibhav Pratap and Bagaria, Resham and Nirmal, Vijay and Khandelwal, Aparna and Purkayastha, Dhruba and Bhatt, Upendra and Shrimali, Gireesh}, title = {{A Design Case Study for The U.S. – India Catalytic Solar Finance Program}}, institution = {Climate Policy Initiative}, year = {2018}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/Credit-Support-Pathways-for-Rooftop-Solar-Projects-in-India.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }