India: Financing solar water heaters

Posted by admin on Jan 23, 2014 in Posts

How interest rate subsidies are beneficial than capital subsidies

The cost of electricity and fuels are increasing day by day as they are non-renewable sources of energy, and it is not prudent to use this energy to heat water for our use. There is an alternate way by which we can get hot water without incurring any cost. By installing solar water heaters at home, a person can save his money, which was going to be spent on other expensive energy resources. Solar water heaters utilize solar energy to heat water presented in the tank and hence; it is free of cost. In most of the homes located in cities, solar water heaters are installed. It is made possible due to low cost financing which is given by the commercial banks.

Ministry of Non-Conventional Energy Sources (MNES) provides regular interest rates. If we take an example of Canara bank, which is headquartered in Bangalore, it provides loans up to two percent for a person whereas, it increases up to three and five percent for institutions and commercial entities respectively. On a whole, a commercial bank can finance up to 85 percent of the project cost.

During earlier days of 1990s, there were very few numbers of solar water system manufacturers. The subsidies were guided and kept under MNES supervision all over the country. For example, there were less than six manufacturers of solar water system. To increase the production, the interest subsidy enticed many commercial banks to pass loans and finance for a solar water heating system, which lead to the increment and development of many other solar water heater manufacturers. Due to this there were more than sixty manufacturers of solar water systems in Karnataka alone.

The solar water systems which are manufactured should be collaborating with the financial institutions so that the systems get qualified for general purposes. If the system is not performing as well, there can be non payment of the loan which leads to the rejection of the supplier.

Due to the availability of the financial programs solar water heaters are installed in various places where there is a need of hot water like a house, hospitals, sugar mills, food processing units, milk processing plants etc.

Such changes should be done in the society and utilization of renewable sources of energy must be increased. We can use other technologies as well to conserve energy like solar photovoltaic, biogas, wind and tidal energy.