Financing solar for irrigation in India: risks, challenges, and solutions

Solar-powered irrigation systems (SPIS) offer significant opportunities to facilitate irrigation access in an environmentally-sustainable manner. In India, with a substantial government support in form of capital subsidies, over 100,000 solar pumps had been installed by December 2016. But a subsidy-led approach would be fiscally unviable to achieve deployment of SPISs at scale, given their high upfront cost. It is argued that availability of credit for different delivery models would be crucial for large-scale deployment of solar pumps in the country. However, several risks and operational challenges often constrain flow of long-term finance for agriculture in developing countries. In view of the need for long–term finance to enable widespread adoption of SPIS, this study investigated the key risks and challenges affecting financing of solar pumps in India. It also explored how different delivery models (individual ownership and water-as-a-service) compare in terms of ease of financing, and the measures required to address perceived risks. For this purpose, semi-structured telephonic interviews with 10 financiers from different institutions, including NABARD, scheduled commercial banks, regional rural banks, and non-banking financial institutions, were conducted.