Cheap US credit destroying India’s solar sector

An Indian consortium promoting sustainability claims that cheap loans offered by the US to Indian firms are “unethical” and dangerous.

The Centre for Science and Environment said the 3% interest rates offered by the US Exim Bank and the Overseas Private Investment Corporation to Indian solar project developers come with the mandatory condition that Indian firms buy solar panels, solar cells and other equipment from American companies.

“Currently, 80% of Indian manufacturing capacity is in a state of forced closure and debt restructuring with no orders coming to them, while US manufacturers are getting orders from Indian solar power developers,” CSE reported.

CSE said the US was exploiting a loophole under the Jawaharlal Nehru National Solar Mission that plans to install 22,000 MW of solar energy by 2022. The mission mandates a domestic content requirement but does not mention thin-film PV technology.

The US Exim Bank and OPIC have been offering low interest rates and a repayment schedule of up to 18 years to Indian solar project developers on the condition they buy thin-film panels made by US companies, CSE said. Some 60% of PV panels installed in India are thin-film.

Since Indian banks offer interest rate of 14% or more, this has skewed the market in favour of thin-film panels imported from the US. CSE said that thin-film photovoltaic cells have lower efficiencies compared to crystalline panels.

The US said US$248 million has been lent by the US Exim Bank and OPIC for grid-connected solar plants in India. The major beneficiaries in this case have been American producers, according to CSE.