Ref. No. NB.DPD-NFS/ SHLS. 1 / 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,

(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

MODEL

Photo Voltaic Module

(Wp) 12 V Battery

(AH)

Indicative capability of the system

Lighting load/ other

loads and operation

duration

Indicative Cost ( `) `) `) `)

Maximum Capital Subsidy

eligible ( `̀̀̀ )

Max. Loan amt. ( `)`)`)`)

bearing interest @

5%

I 10 10 10 W/4 hour 3000 900 1500

II 18 20 10 W/8 hour; 20 W/4

hour 5400 1620 2700

III 37 40 10 W/12 hour; 30 W/4

hour 11100 3330 5550

IV 50 60 20 W/8 hour; 40 W/4

hour 15000 4500 7500

V 70 70

20 W/12 hour; 30 W/8

hour; 50 W/4 hour; 60

W/4 hour

21000 6300 10500

VI 85 120 40 W/8 hour 25500 7650 12750

VII 100 120 30 W/12 hour 30000 9000 15000

VIII 120 135 40 W/12 hour; 50 W/8

hour 36000 10800 18000

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.

APPENDIX -1A

BOUNDARY CONDITIONS FOR SUPPORT TO OFF-GRID SOLAR PV

APPLICATIONS

1. Individuals

A. All applications except 1B 1 kWp

B. Pumps for irrigation and community

drinking water

5 kWp

Capital Subsidy

&

Interest Subsidy

2. Non-commercial entities

A. All applications except 2B 100 kWp per site

B Mini-grids 250 kWp per site

Capital Subsidy

&

Interest Subsidy

3 Industrial/Commercial entities

A. All applications except 3 B 100 kWp per site

B. Mini-grids for rural electrification 250 kWp per site

Capital Subsidy

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

liquid as the working fluid

3300

3 Flat Plate Collectors with air as the

working fluid

2400

4 Solar collector system for direct

heating applications

3600

5 Concentrator with manual tracking 2100

6 Non-imaging concentrators 3600

7 Concentrator with single axis tracking 5400

8 Concentrator with double axis

tracking

6000

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.

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

(Repayment received during)

From bank to NABARD

(Repayable as on)

Date Amount (`) Date Amount (`) 01 July … to 31

December …..

31 January …..

01 January …. To

30 June ………

31 July ……

01 July … to 31

December …..

31 January …..

01 January …. To

30 June ………

31 July ……

01 July … to 31

December …..

31 January …..

01 January …. To

30 June ………

31 July ……

01 July … to 31

December …..

31 January …..

01 January …. To

30 June ………

31 July ……

01 July … to 31

December …..

31 January …..

01 January …. To

30 June ………

31 July ……

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.

1

Pre-approved Model

Nos.

2

1

3

2

4

3

5

4

6

5

7

…

8

…..

9

11

10

Solar

Water Heating

System 11

Total

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: