SBP eases financing conditions for renewable energy solution providers

Staff Reporter BOL News

11th Oct, 2021. 07:44 pm
State Bank

State Bank announces implementation

KARACHI: The State Bank of Pakistan (SBP) has eased conditions for renewable energy solution providers under its refinance scheme.

Now, all the renewable energy investment entities (RE-IEs) interested in installing renewable energy projects/solutions are allowed to avail refinance under category III of the scheme.

An RE-IE is a business entity, including vendors and suppliers whose business is to establish renewable energy projects for onward leasing/renting out/selling on deferred payment basis or selling of electricity generated from these projects to the 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.

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.

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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