Concerns that India’s burgeoning solar boom would be restrained by nervous financiers reached fever pitch in the spring, when observers suggested that less than half of the projects allocated under the first round of the National Solar Mission (NSM) would reach financial close by their summer deadline.

Those fears were well founded at the time, says Inderpreet Wadhwa, chief executive of Delhi-based PV developer Azure Power. Since then, however, local lenders have warmed to the sector considerably.

“Earlier this year, [PV] was a tough sell in the eyes of many lenders, due to the combination of technology risk, policy risk and project risk,” Wadhwa tells Recharge.

But thanks to the steady trickle of utility-scale projects coming on line over the past few months, as well as the unflinching support of the government, the technology and policy risks have largely been scrubbed from the equation, he says.

“The only thing that really remains is the project risk,” Wadhwa says. "For firms that have sound experience and are using good products and contractors offering proper warranties, there is plenty of capital for financing these projects in India.”

In August, to the surprise of many observers, it was announced that 35 of the 37 projects allocated in the NSM’s first batch had reached financial close before the deadline. The extent to which the government intervened, if at all, is unknown.

In some cases it is proving even easier to drum up finance for projects supported by state programmes, as they are not subject to the same local-content rules.

For example, the US Export-Import Bank has provided tens of millions of dollars in loans to Indian developers that have committed to using modules made by American companies such as First Solar and Abound Solar.

Murthy Sridhar, managing director of AEG Power Solutions India, which has just opened an inverter factory in Bangalore, says the industry is breathing a sigh of relief for now, but many challenges lie ahead.

“It’s important to remember the solar market is still in a nascent state in India,” he says. “The NSM, state policies — these things could change.”

Sridhar also notes that even if India adds 300MW this year — and some believe it will go significantly beyond that — it will still be far behind its collective solar target once all the various state and national support schemes are taken into account.

“That said, 300MW will be seen as a big success, and that confidence will spill over into next year. I expect growth to be even stronger next year,” he adds.

One of the most hopeful signs is that the lion’s share of the contracting work is being done by Indian firms, says Wadhwa.

The traditional role of engineering, procurement and construction (EPC) contractor is being divided up in the local PV market, partly because so few established foreign companies have the boots on the ground to do the heavy lifting.

“A lot of foreign firms are coming in with good engineering, but not necessarily in construction,” Wadhwa explains. “These projects take hundreds of skilled and unskilled workers.

“EPC is really being broken down into E and P and C in India, which is interesting compared to other markets.

“If you ask who are the top three solar EPC players in India, I couldn’t tell you. If you ask me who the best engineering or procurement or construction companies are, I can give you a much better answer.”

Solar

In Depth: All systems go for Indian PV as finance fears ease