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Ref. No. NB.DPD-NFS/ SHLS.

/1116 /2010-11

Circular No. 199 /DPD-NFS- 04 /2010

01 November 2010

The Chairman/ Managing Director


All Commercial Banks/ Regional Rural Banks

Dear Sir,

Capital Subsidy-cum-Refinance Scheme for Installation of Solar Off-grid


(Photo- voltaic and thermal) & Decentralised applications under the
Jawaharlal Nehru National solar Mission of the Ministry of New and
Renewwable Energy, Government of India

1. The Ministry of New and Renewable Energy (MNRE), Government of India has
introduced a subsidy linked credit scheme for Solar Off-grid (Photo-voltaic & thermal)
and decentralized applications to promote commercial marketing of solar energy
systems and devices by extending financial incentives in the form of capital and interest
subsidy on loans availed from financial institutions by the target clientele. The scheme
provides for routing the capital subsidy and the interest subsidy on bank loans availed
of by the clients from the banking system for solar energy conversion/ user systems
and devices under this scheme through National Bank for Agriculture and Rural
Development (NABARD). “The Capital Subsidy – cum- Refinance Scheme for installation
of solar off-grid (photovoltaic & thermal) and Decentralised Applications” is being
introduced to enable the Banking system (Commercial Banks and RRBs eligible for
drawing refinance from NABARD) to avail of the financial resources including the
subsidies on behalf of their borrowers for creation of relative assets (technically termed
as phot-voltaic and thermal systems).

2. The details regarding the objectives, scope of the scheme, eligible institutions and
other terms and conditions governing the Scheme have been listed in the guidelines
appended hereto.
3. You are requested to give wide publicity to the scheme through all your branches
and to prefer drawal applications for claiming the capital subsidy/ subsidised refinance
under the scheme as per the scheme stipulations to the respective regional offices of
NABARD and thus help the objective of the Scheme to promote off-grid applications of
solar energy (both PV and Solar Thermal) , create a paradigm shift needed for
commorditization of off-grid solar applications and to encourage replacement of
non-renewable energy sources like fossil fuels, kerosene and diesel with solar energy to
meet the energy requirements.

4. MNRE, IREDA and NABARD would be providing web and non-web based technical
support besides training to the field level functionaries of the financing banks.

5. Please acknowledge receipt.

Yours faithfully,
Sd/-

(J.C.Mishra)
Chief General Manager

Encl: as above
CAPITAL SUBSIDY-CUM-REFINANCE SCHEME FOR
INSTALLATION OF SOLAR OFF-GRID (PHOTO-VOLTAIC AND
THERMAL) & DECENTRALISED APPLICATIONS UNDER THE
JAWAHARLAL NEHRU NATIONAL SOLAR MISSION –
GUIDELINES

1. Background

1.1. Ensuring affordable, adequate and uninterrupted power supply to domestic


and other consumers, remains one of the major challenges before the country.
There is also an increasing concern and growing interest to reduce reliance on
fossil fuel and other non-renewable sources of energy. Time is now ripe to opt
for cleaner and greener fuel. With over 300 clear sunny days available annually
in India, there is a huge potential to tap, store and retrieve solar power – much
more than the current power requirements. However, the actual exploitation of
solar power to meet the energy requirements of the country is insignificant when
compared to other energy resources. Government of India has launched the
Jawaharlal Nehru National Solar Mission (JNNSM) as a major initiative to promote
ecologically sustainable growth while addressing India’s energy security
challenges. The immediate focus of the Mission is on setting up an enabling
environment for solar energy penetration in the country through a multi agency
approach for centralized and decentralized applications of solar energy.

1.2 The use of solar powered systems and devises through application of Solar
Photo Voltaic (PV) and Solar Thermal methods have remained underutilized due
mainly to high unit costs. The key challenge is, thus, to provide an enabling
framework for expanding solar energy markets by bringing down the costs.
Against this background, the Ministry of New and Renewable Energy (MNRE),
Government of India has introduced a Scheme for Solar Off-grid (Photo-voltaic &
thermal) and decentralized applications to promote commercial marketing of
solar energy systems and devises by extending financial incentives in the form of
capital and interest subsidy on loans availed from financial institutions by the
target clientele. Thus the scheme provides for routing the capital subsidy and the
interest subsidy on bank loans availed by the clients from the banking system
for solar energy conversion/ user systems and devises under this scheme
through National Bank for Agriculture and Rural Development (NABARD). “The
Capital Subsidy – cum- Refinance Scheme for installation of solar off-grid
(photovoltaic & thermal) and Decentralised Applications” is being introduced to
enable the banking system (Commercial Banks and RRBs eligible for drawing
refinance from NABARD) to avail of the financial resources including the
subsidies on behalf of their borrowers for creation of relative assets.

2. Objectives

The main objectives of the scheme are to:


- promote off-grid applications of solar energy (both PV and Solar Thermal)
- create a paradigm shift needed for commorditization of off-grid solar
applications
- encourage replacement of non-renewable energy sources like fossil fuels,
kerosene and diesel with solar energy to meet the energy requirements.

3. Scope/Coverage of the Scheme

3.1 Phasing of the Scheme


The currency of the scheme will be co-terminus with phase-I (initially upto March
2013) of the Jawaharlal Nehru National Solar Mission and would be applicable to
all parts of India and will cover projects specifically approved by the Project
Approval Committee of MNRE.

3.2 Pre-approved Models/ Systems


MNRE in consultations with IREDA and NABARD has finalized a list of 11 model
projects together with technical and financial parameters appended to these
guidelines (Appendix -1) and these models would be deemed to have been
approved by the PAC for financing by the banks.
3.3. MNRE has also approved the financing of Flat Plat and Evacuated Tube
Collector based solar water heating systems manufactured / installed by the BIS
approved manufacturers of the system with the same terms and conditions, by
the banks, with capital subsidy and refinance support from NABARD.
3.4 The systems to be financed under this scheme should conform to the
conditions/ stipulations laid down in the projects and more specifically under the
General Specifications and Terms and conditions (Appendix-2) and can be
financed without seeking prior approval from the PAC. A list of short listed
manufacturers of the Systems for Solar Photovoltaic Lighting systems and the
solar water heating systems eligible to participate in the Scheme alongwith their
geographical spread is also enclosed to facilitate financing under the scheme and
to ensure proper after-sale service to the borrowers. Purchase of systems
manufactured by companies not listed therein will require prior approval by
MNRE.

4. Eligible Institutions

All Commercial Banks (including private commercial banks) and Regional


Rural Banks which are eligible to avail of refinance facilities from NABARD
would be covered under this scheme subject to their satisfying the eligibility
criteria for refinance as may be stipulated by NABARD from time to time. Funds
towards meeting the subsidy and refinance requirements under the scheme
would be provided to NABARD by IREDA. Projects to be eligible for funding
support under the Scheme will need prior approval from the Project Approval
Committee of MNRE. The model projects appended to these guidelines
(Appendix-1) and the Flat Plat and Evacuated Tube Collector based solar water
heating systems indicated above would, however, be deemed to have been
approved by the PAC and the financing banks can finance units conforming the
conditions/ stipulations laid down in the model projects and more specifically
under the General Specifications and Terms and conditions (Appendix-2) without
seeking prior approval from the PAC. A list of short listed manufacturers of the
Systems for Solar Photovoltaic Lighting and solar water heating systems and
meeting other small electrical needs to participate in the Scheme is also enclosed
for the guidance of the participating Banks.

5. Capital Subsidy

The quantum of capital subsidy and refinance would be made available as per
the specifications of MNRE/ IREDA from time to time. Currently the capital
subsidy would be to the extent of 30% of the benchmark cost subject to the
boundary conditions indicated in. For the year 2010-11, the benchmark price for
photo voltaic with battery back-up is considered as ` 300 per Watt Peak (Wp). In
respect of the systems which do not use storage battery such as water pumping
systems, the installed PV system cost would be considered subject to a cap of `
210 per Wp. Capital subsidy to be released will have to follow the fresh
benchmarks to be indicated by MNRE for this purpose. For Evacuated Tube
Collectors (ETCs) based solar water heating systems, capital subsidy will be
limited to ` 3000 per square metre of collector area while for Flat Plate Collectors
(FPCs) with liquid as the working fluid, the subsidy will be limited to ` 3300 per
square metre. For flat Plate Collectors with air as the working fluid, the capital
subsidy is limited to ` 2400 per square metre of collector area.

6. Release of Capital Subsidy


The eligible capital subsidy would be released upfront to the banks on receipt of
the drawal application format (Annexure-1) after sanction of the loan by the
bank. The capital subsidy component would, however, be released to the
suppliers on behalf of the borrower by the financing Banks only after satisfactory
installation and commissioning of the system. However, in order to enable the
borrowers to access the benefit of the capital subsidy, the loan repayment period
would have a minimum lock in period of 3 (three) years from the date of
disbursement of the first instalment of the loan.

7. Margin Money, Loan Period and Rate of Interest on Loan

The borrowers are required to bring in 20% of the cost of the project as the
margin money for accessing credit facilities from banks to acquire the assets.
The loans to cover the balance (within the ceilings specified against each asset)
after reducing the eligible capital subsidy, would be extended with a repayment
period not exceeding 5 years and would carry an interest rate of 5% p.a. No
interest will, however, be charged by the financing banks on the capital subsidy
component.

8. Security

The loans extended under the scheme would be secured as per the existing RBI
guidelines in this regard.

9. Release of Refinance and Repayment Schedule

The loan amount as per the eligibility availed by the target participants will be
repayable in suitable instalments not exceeding 5 years. The banks may fix the
repayment schedule of the loan having regard to the household cashflow of the
borrowers and the life of the assets so as to ensure full repayment of the loan
alongwith interest thereon within five years. The banks would be eligible to draw
100% of the loan outstanding (excluding the capital subsidy) as refinance from
NABARD on an automatic basis, (subject to the maximum loan amount indicated
in Annexure I) subject to usual conditions governing release of refinance from
NABARD. The refinance would carry an interest rate of 2% p.a. The refinance
claims under the scheme are to be preferred in the drawal application formats
appended hereto. The financing banks may prefer refinance claims on a monthly
basis (eg. loans disbursed by banks from 15th to next 15th can be claimed by say,
25th of the month and refinance will be released to banks as far as possible
within next 3-4 working days if the applications are otherwise in order).
Repayment of refinance alongwith interest would be made by the banks to
NABARD on a half-yearly basis i.e. as on 31 July and 31 January every year (in
respect of repayments fallen due during the immediately preceding 6 months).
Penal interest as per the existing policy of NABARD would be applicable for
default in repayment of the refinance as per the existing instructions of NABARD.

10. Monitoring

The financing banks will have to maintain separate records for loans/ subsidy
extended under the scheme and the details will have to be submitted to
MNRE/NABARD/ IREDA as and when required. MNRE/NABARD/ IREDA will also
have the right to inspect the books of accounts pertaining to such accounts
whenever required.
Appendix-1
Technical and Financial Parameters of Home Lighting Systems (pre-approved PV
models) to be financed

Indicative capability of Max. Loan


Photo the system Maximum amt. ( `)
Voltaic Lighting load/ other Capital bearing
Module 12 V Battery loads and operation Indicative Subsidy interest @
MODEL (Wp) (AH) duration Cost ( `) eligible ( ` ) 5%
I 10 10 10 W/4 hour 3000 900 1500
10 W/8 hour; 20 W/4
II 18 20 5400 1620 2700
hour
10 W/12 hour; 30 W/4
III 37 40 11100 3330 5550
hour
20 W/8 hour; 40 W/4
IV 50 60 15000 4500 7500
hour
20 W/12 hour; 30 W/8
V 70 70 hour; 50 W/4 hour; 60 21000 6300 10500
W/4 hour
VI 85 120 40 W/8 hour 25500 7650 12750

VII 100 120 30 W/12 hour 30000 9000 15000


40 W/12 hour; 50 W/8
VIII 120 135 36000 10800 18000
hour
IX 150 150 60 W/8 hour 45000 13500 22500

X 180 180 50 W/12 hour 54000 16200 27000

XI 200 2 x 120 60 W/12 hour 60000 18000 30000

The total cost, the maximum capital subsidy and the maximum eligible quantum of subsidized loan
have been worked out on the basis of the benchmark cost of ` 300/- per Wp for 2010-11 prescribed
by MNRE. In case the actual cost of the system is less than the indicative costs mentioned above, the
capital subsidy and loan eligibility will be calculated @ 30% and 50% respectively of the actual cost.
Appendix 2

GENERAL SPECIFICATIONS & TERMS AND CONDITIONS UNDER THE “THE


CAPITAL SUBSIDY – CUM- REFINANCE SCHEME FOR INSTALLATION OF SOLAR
OFF-GRID (PHOTOVOLTAIC & THERMAL) AND DECENTRALISED APPLICATIONS”

1. The models could be home lighting systems or inverter based


systems capable of handling general AC loads.

2. Manufacturers to provide Compact Fluorescent lamps (CFLs) of 9


W/11 W for home lighting systems.

3. The battery will be lead-acid of flooded electrolyte type, positive


tubular plate and low maintenance.

4. Inverter should be of quasi sine wave/sine wave type.

5. PV module (s) shall contain crystalline silicon solar cells.

6. PV modules must be warranted for their output peak watt


capacity, which should not be less than 90% at the end of 10 years
and 80% at the end of 25 years.

7. The balance of systems provided must be warranted against any


manufacturing/ design/ installation defects for a minimum period
of 5 years.

The manufacturer has to give an undertaking with the invoice


(Annexure-2) that the system offered meets the Technical requirements/
standards contained in ANNEXURE-3 of the MNRE guidelines Ref.
5/23/2009 – P&C Dated: 16.06.2010 on off grid SPV power plant
systems under National Solar Mission.
ARF – FORMAT
Loans under JNNSM Scheme of GOI

DRAWAL APPLICATION FOR SANCTION/ RELEASE OF REFINANCE


UNDER JNNSM SCHEME OF GOI UNDER AUTOMATIC REFINANCE
FACILITY (ARF)

Ref. No. Date:

From (Name and Address of the Financing Bank)

To

The Chief General Manager/ OIC


NABARD Regional Office,

_______________________

Dear Sir,

Application for Sanction/ Release of Refinance under the Scheme for


Solar Off-grid (Photo-voltaic & thermal) and decentralized applications
under the Jawaharlal Nehru National Solar Mission of the Government
of India

We hereby apply for sanction and release of refinance aggregating to `


………………(Rupees …………………only) in respect of financial assistance
sanctioned and disbursed by us to our constituents, the particulars in respect of
which are furnished in the Annexure. We agree to repay the refinance availed of
by our Bank as per the repayment schedule appended to this drawal application.
We also agree that the repayment schedule(s), if revised and communicated by
NABARD, in respect of refinance claimed in this application will be scrupulously
followed by us.

2. We certify that:

i. The individual loan proposal conforms to the policy, procedures


and guidelines laid down by NABARD under the captioned
scheme from time to time.
ii. The proposals have been appraised by us/ our branches and are
found to conform to the technical and financial parameters laid
down under the captioned scheme guidelines of NABARD.
iii. We have not applied earlier for capital subsidy/ refinance
covered by this drawal application from NABARD or any other
institution
iv. The refinance amount claimed is exclusive of the recoveries/
capital subsidy/margin money received or receivable.
v. We have obtained consent letters from our constituents to the
effect that they have no objection to our furnishing to NABARD
all such information as may be required from time to time.
vi. MNRE/NABARD and IREDA will have the right to seek any
information as they may require from time to time and also for
inspection of the unit.
vii. NABARD shall have the right to inspect books and loan accounts
covered under this application and /or call for copies of the
related memoranda/ sanction notes/ any other relevant
information in this behalf.
viii. Loans granted under DRI scheme have been excluded.
ix. All the units financed under the scheme in respect of which
refinance is claimed are eligible under Jawaharlal Nehru
National Solar Mission scheme of Government of India for
subsidy/ refinance.
x. The loans sanctioned to the borrowing units does not exceed
the maximum loan limits prescribed under the captioned
scheme

3. We further certify that the amount of refinance already availed by us


and outstanding as on date together with the proposed availment
would be within the borrowing limit of our Bank.
4. We also certify that the rate of interest charged on the loan amount
conform to the rates stipulated by NABARD under the captioned
scheme.
5. We agree that if on verification of our records and of our constituents,
NABARD comes to the conclusion that the accounts against which the
disbursement of capital subsidy/ loan does not conform the guidelines
laid down by it from time to time, NABARD will have the right to recall
the entire capital subsidy/ refinance disbursed in respect of such
accounts on such conditions as stipulated in the General Refinance
agreements.

For and on behalf of the financing Bank


Signature of the authorized officer with designation and rubber stamp.

Enclosure
Date :
Place :
A. Repayment Schedule

From Borrower to Bank From bank to NABARD


(Repayment received during) (Repayable as on)
Date Amount (`) Date Amount (`)
01 July … to 31 31 January …..
December …..
01 January …. To 31 July ……
30 June ………
01 July … to 31 31 January …..
December …..
01 January …. To 31 July ……
30 June ………
01 July … to 31 31 January …..
December …..
01 January …. To 31 July ……
30 June ………
01 July … to 31 31 January …..
December …..
01 January …. To 31 July ……
30 June ………
01 July … to 31 31 January …..
December …..
01 January …. To 31 July ……
30 June ………
Annexure-1
DRAWAL APPLICATION FOR CAPITAL SUBSIDY UNDER THE CAPITAL
SUBSIDY-CUM-REFINANCE SCHEME FOR INSTALLATION OF SOLAR
OFF-GRID (PHOTO-VOLTAIC AND THERMAL) & DECENTRALISED
APPLICATIONS UNDER THE JAWAHARLAL NEHRU NATIONAL SOLAR
MISSION
Name of the Bank:
Period of the Claim (Month/Quarter) :
Details of the claim.
Name of the Branch:--------------- District:---------------- State:------------------
Sr.No. Pre-approved Model 1 2 3 4 5 … ….. 11 Solar Total
Nos. Water
Heating
System
1 2 3 4 5 6 7 8 9 10 11 12
Individuals
Groups
Category - SC
- ST
- OBC
Minority
Community
No. - Female
Total cost of the system
for units claimed
Capital Subsidy Amount
eligible for units claimed
(`)
Loan Amount excluding
capital subsidy for units
claimed (`)
Margin Money by the
borrower for the units
claimed (`)

Certified that all the terms and conditions stipulated under the captioned scheme are
satisfied in case of all loans for which capital subsidy is claimed with this application and
that the capital subsidy claimed are within the monetary limits prescribed under the
scheme.

We have not applied earlier for capital subsidy covered by this drawal application from
NABARD or any other institution
Capital subsidy Account:

Capital Subsidy Amount Received from NABARD


1. Drawal Application No. dated :`
2. Drawal Application No. dated :`
3. ………………….
__________________________________________________________________
Total Capital Subsidy Received :`

Capital Subsidy Disbursed:


1. Against Claims made under Drawal Applcation
No.

:`
2. Against claims made under Drawal Application
No.

:`
3. ……………… :`

Total Capital Subsidy Released :`

Balance Capital subsidy with the Bank (as on ): `

Total Capital subsidy claimed with this application :`

(Signature of the authorized officer of the Bank)


Date and Seal of the Bank
Annexure-2

(On the letterhead of the Agency/ System provider)

PROFORMA FOR DECLARATION BY THE AGENCY SUPPLYING THE


OFF-GRID SOLAR APPLICATION SYSTEM

It is certified that I/we have read the guidelines issued by the Ministry vide
5/23/2009/P&C dated 16th June, 2010 and the related provisions/terms and
conditions for availing financial support from the Ministry of New and
Renewable Energy and I/we agree to abide by these guidelines and related terms
and conditions.

I/we confirm that the proposed solar PV system(s) for which subsidy/ subsided
loan is being claimed have not been installed/supplied earlier .

A detailed site survey has been done/or will be undertaken to identify the
beneficiary before actual supply and installation takes place.

This is to certify that the various components of the SPV systems will conform to
the Relevant Standards, as mentioned in the Guidelines for Off-grid and
Decentralized Solar Applications (Annexure-3) for SPV modules and components
under JNNSM.

Copies of the Relevant IEC/ BIS Certificates are enclosed.

Signature _____________
Name & Designation
of Authorized Signatory

Address of the Agency/System provider

Seal

Place:
Date:
APPENDIX -1A

BOUNDARY CONDITIONS FOR SUPPORT TO OFF-GRID SOLAR PV


APPLICATIONS

1. Individuals
A. All applications except 1B 1 kWp Capital Subsidy
B. Pumps for irrigation and community 5 kWp &
drinking water Interest Subsidy
2. Non-commercial entities
A. All applications except 2B 100 kWp per site Capital Subsidy
B Mini-grids 250 kWp per site &
Interest Subsidy
3 Industrial/Commercial entities
A. All applications except 3 B 100 kWp per site Capital Subsidy
B. Mini-grids for rural electrification 250 kWp per site or
Interest Subsidy

Scale of Capital Subsidy :


Based on benchmarking annually Rs.90/Wp With battery storage
Rs.70/Wp Without battery
storage
Scale of Interest Subsidy :
Soft loan @ 5% p.a. On the amount of
project cost
Less promoters’
contribution
Less capital subsidy
amount

Use of the best/competitive and innovative technologies available globally would be


allowed, subject to standards and technical parameters, laid down by MNRE.
To meet unmet community demand for electricity or in unelectrified rural areas,
standalone rural SPV power plants with battery storage in a micro grid mode/local
distribution network, would be provided Rs.150/Wp of capital subsidy AND soft loan at
5%.
APPENDIX-1B

BOUNDARY CONDITIONS FOR SUPPORT TO OFF-GRID SOLAR THERMAL


APPLICATIONS

S.No. Solar Collector type Capital subsidy / Collector


area (Rs / sq.m.)
1 Evacuated Tube Collectors (ETCs) 3000
2 Flat Plate Collectors (FPC) with 3300
liquid as the working fluid
3 Flat Plate Collectors with air as the 2400
working fluid
4 Solar collector system for direct 3600
heating applications
5 Concentrator with manual tracking 2100
6 Non-imaging concentrators 3600
7 Concentrator with single axis tracking 5400
8 Concentrator with double axis 6000
tracking

1. The capital subsidy/unit collector area, as given above, is based on 30% of the
benchmark costs which would be reviewed annually. Capital subsidy would
be computed based on the applicable type of solar collector multiplied by the
collector area involved in a given solar thermal application/project.
2. Besides the capital subsidy as proposed above, the pattern of support could
include a soft loan at 5%, as under :

a) Soft loan @ 5% interest would be available, inter alia, for balance cost
which may comprise installation charges, cost of civil work for large
systems and costs of accessories (viz. insulating pipeline, electric
pump, controllers and valves, additional water tanks, blower for air
heating systems, drying trays for solar dryers, steam system, etc.), etc.
b) To meet unmet demand for electricity and thermal energy or in un
electrified rural areas, Solar thermal power plants and local
distribution network, would be provided capital subsidy of 60% AND
soft loan at 5%. These could be in either stand alone or co / poly
generation mode.
Annexure to Drawal Application for Refinance under Solar Off-grid (PV and Thermal) and decentralised applications under ARF
(To be submitted in Duplicate )

Name and address of the Bank :

Details of Refinance applied for the month/ quarter :

Name of Off-grid Physical Total Bank Loan Bank loan Bank loan Refinance Of Column 4 For NABARD's
the pre- Units Cost - sanctioned released outstanding Claimed use
District approved Actuals (Net of
& Code Model No. or as Capital
per the subsidy)
ceiling
No. of SC/ST/OBC Borrowers No. of No. of Refinance
women Minority recommended
borrowers Community
SC ST OBC Total borrowers
1 3 4 5 6 7 8 9 10 11 12 13 14 17
1
2
3
4
5
6
7
8
9
10
11
Solar
Water
Heating
System
Date :
Place :

Signature of the Bank Official

Bank's seal

Checked by
Solar Statement Proforma 11.10.2010.123

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