An Incredible, Snowy Tale of Solar Rooftops in India!

Today, 2nd February 2021, is a little-known but very special anniversary in India’s Grid Connected Rooftop Solar story. It was on this day that three individuals (Rajat Misra, Neeraj Jain and yours truly, Mohua Mukherjee) found ourselves attending the same corporate retreat in Shimla, India. The previous night, when we all arrived there, it had been bitterly cold. We had mingled and socialized at the welcome party, next to bonfires provided by the hotel, and that is where the India Solar Rooftop story was originally conceived!

The three of us had hit it off at the welcome party. We represented very different and un-connected organizations, (State Bank of India and the World Bank), but we felt a strong, shared commitment to working on some meaningful and important project together.  Our instinct told us that the combined, huge footprints of our respective employers should be able to result in something good and worthwhile.

We were strongly motivated to collaborate, and did not want to part ways aimlessly after this beautiful corporate retreat ended. I remember that first evening Rajat, Neeraj and I were throwing around various wild ideas on what we could possibly do, while standing next to the bonfire and rubbing our hands together to keep warm. 

The following day we spent more time together, taking in the beautiful sights of Shimla for a couple of hours when we stepped away from the organized programme. I learned about the history of the British engineered “toy train”, because Rajat Misra turned out to be a very impressive fountain of knowledge on the history and technology of Indian railways. Then we went to see the Institute of Advanced Studies, walked in and met the person in charge, with whom we had an enjoyable conversation. All this time, while none of this sightseeing was connected to solar rooftops, our comfort level with each other and our determination to work together and do something important together, was growing and solidifying.

At this stage I should underline what a crazy idea and unlikely prospect this was. I emphasize the point that both of our employers were behemoths in their own right. As mentioned, one was the State Bank of India (which was actually hosting the excellent retreat in Shimla), and the other was the International Bank for Reconstruction and Development, also commonly called the World Bank.

These are two massive organizations, each with their own deep-seated bureaucracies and very formal procedures for initiating new tasks and committing staff time to them. I don’t know what boundless optimism pushed us that day to think we just wanted to bring these two entities together and do a joint project! This was on 2nd February 2015, in the cold winter breeze of Shimla. How bold we were! It’s not standard procedure for staff to think of brand-new things that will get their employers to deviate from the well laid out ways of doing things. In the case of SBI it involved setting up a new unit to be in charge of this program! In the case of the World Bank, it involved a brand-new relationship and all the “due diligence” that would involve. I just felt that we HAD TO make it work!

To cut a long story short, we carried back our dreams of collaboration to our respective workplaces. We started “talking up” the idea of rooftop solar PV. I need to quickly point out that Rooftop PV was not an established concept in India yet, the way it is now. This was in February 2015, when rooftop PV was expensive, still experimental, and there were no business models. It was most definitely not a “thing” yet. Gujarat was the only state in the country which was actively engaging in solar parks and a little bit of rooftop solar. Rajasthan also had a solar park but no rooftop solar. Prices of ground mounted solar generation were still very high, around 17 rupees per kWh (compared to 2 rupees per unit today). There was no price for rooftop solar generation because there were no third-party rooftop developers. The very few installed rooftop solar units in the country, mostly belonging to eco-crusaders, were all self-owned and the energy was self-consumed. Thus, no quoted price was involved apart from the upfront capital investment. Rooftop solar was simply not yet competitive.

Clearly, in 2015, there was no appetite among commercial banks for lending to rooftop projects under any circumstances. The only known model was the ownership model (also called CAPEX), and CAPEX owners also could not obtain commercial loans. Lenders openly stated that they were not comfortable with rooftop technology which was too new and un-tested in India.

The World Bank was interested in supporting decarbonization through solar energy in India, but given the government’s policy framework, was looking mostly at solar parks and support for transmission lines to connect those solar parks to markets.

The Ministry of New and Renewable Energy held frequent round table meetings with commercial lenders to understand why they were not interested in lending for rooftop solar; quite simply, no one wanted to be the first mover and thereby the lightning rod to attract all the difficulties and serve as a cautionary tale to the others.

Rajat, Neeraj and I worked hard, in our respective organizations, to plant the idea of working with each other on a solar rooftop project for India. We used our existing good-will and personal relationships at the highest levels, including at MNRE, to bring together the senior officials and get them used to the idea. In the background, India was preparing its Nationally Determined Contributions (NDCs) for the Paris Climate Meeting which was another ten months down the road.

One day, about two months after that Shimla winter evening, in April 2015, we found that our idea had suddenly ignited! All that patient watering and tending had paid off! The World Bank was officially asked by the Government of India to partner with State Bank of India and deliver a half-billion dollar loan for Rooftop Solar. Basically, the State Bank of India had decided, together with the Central government, to set up the first ever commercial lending program for Rooftop Solar in India, and the World Bank was to fund it, provided it met all the required criteria of both institutions.

And so began a frenzied marathon inside both institutions, to pull it off and design a project that would meet with acceptance by all stakeholder groups (including large developers who were mostly focused on the ground-mounted segment and were still lukewarm about rooftop PV). I personally pushed to introduce third party business models, which I was told would “never work in India” due to the lack of confidence in multi-year contracts with rooftop owners. There was push-back from all sides, including in my own institution. I managed to hold firm by saying that we should leave these OPEX concepts in the project design, along with the CAPEX model, and if no one used the OPEX model, so be it. Let it be on the menu and left untouched, if there was indeed so little faith in contracts. Fortunately, OPEX is now the fastest growing segment and has made a real difference to the rooftop market because it removes the upfront high payment barrier. That makes me very happy.

It was not easy, but it was an immensely rewarding process. Today, six years on, we have all gone our separate ways. Rajat Misra now holds a very senior leadership position at an international multilateral infrastructure bank. Neeraj Jain is also using his huge talents to structure international deals at a multilateral lender. But we keep in touch and we often marvel at how it all happened. We wished hard to create an unlikely synergy between our employers, then suddenly we did and it was like a wild white-water rafting trip for about a year! Lots of unexpected obstacles we had to navigate through, including a few that almost turned into deal-breakers, but we got there in the end. And the fact that commercial lending to the rooftop sector is taken for granted nowadays, is our greatest source of joint satisfaction! Thank you Rajat and Neeraj! What a great experience we had!