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SBP makes it easier for renewable energy solution companies to get funding

KARACHI: Under its refinancing plan, the State Bank of Pakistan (SBP) has made circumstances easier for renewable energy solution suppliers.

All renewable energy investment organisations (RE-IEs) interested in implementing renewable energy projects/solutions can now apply for refinancing under the scheme’s category III.

An RE-IE is a company, which includes vendors and suppliers, that develops renewable energy projects for onward leasing, renting out, or selling on a deferred payment basis, or selling electricity generated by these projects to end-users.

With an aim to help address the challenges of the energy shortages and climate change, the central bank revised its financing scheme for renewable energy in July 2019.

The SBP also launched a Shariah-compliant version of the scheme in August 2019.

Also read: The State Bank of Pakistan (SBP) has imposed additional lending terms

The scheme now comprises three categories. Under Category I, the financing is allowed for setting up renewable energy power projects with the capacity ranging from 1MW to 50MW for own use or selling of electricity to the national grid or a combination of both.

Under the Category II, the financing is allowed to domestic, agriculture, commercial and industrial borrowers for the installation of renewable energy-based projects/solutions of up to 1MW to generate electricity for own use or selling to the grid/distribution company under net metering.

Under Category III, the financing is allowed to vendors/suppliers/energy sale companies for the installation of wind and solar systems/solutions of up to 5MW.

Since the inception of the scheme, 717 projects having potential of adding 1,082MW of energy supply through renewable sources have been financed.

As of June 30, 2021, the total outstanding financing under the scheme is Rs53 billion, while there is a substantial take up under the categories I and II, solution suppliers under the Category III faced problems.

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Accordingly, in the light of the feedback received from the stakeholders, including renewable energy solution suppliers, Alternative Energy Development Board, Nepra and banks, the requirement of AEDB certification has been relaxed for RE-IEs who do not undertake installations on their own but hire services of installers/vendors for the installation of RE projects/solutions.

However, vendors/suppliers/engineering procurement and construction (EPC) contractors of these RE-IE will still be required to be certified under the AEDB certification regulations.

It is expected that this revision in Category III will further facilitate production of clean energy.

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