KARACHI: The State Bank of Pakistan (SBP) on Wednesday doubled the scope of its Renewable Energy Refinancing Scheme from Rs1 billion to Rs2bn to help address the challenges of energy shortages and climate change in the country.

The SBP said it has enhanced the scope of its refinance scheme by allowing financing under category III to solar and wind-based energy sale companies.

The bank said the project size established by the vendor or energy sale company has now been enhanced from 1MW to 5MW.

“The cumulative financing limit has also been increased from Rs1bn to Rs2bn,” it said while adding that the decision was taken in light of the feedback received from stakeholders.

The SBP Financing Scheme for Renewable Energy was announced in June 2016 with an aim to help address energy shortages and climate change in the country.

The scheme was initially divided in two categories, with the first category allowing financing for renewable energy power projects with capacity ranging from 1-50MW for own use or selling to the national grid or combination of both.

The second category allowed financing to domestic, agriculture, commercial and industrial borrowers for installation of renewable energy-based projects of up to 1MW to generate electricity for own use or selling to the grid or distribution company under net metering.

Later, in July 2019, the SBP introduced category III to facilitate financing to vendors and suppliers for installation of wind and solar systems of up to 1MW. The SBP also launched a shariah-compliant version of the scheme in August 2019.

“Since the introduction of the scheme, total outstanding financing under the scheme has reached to Rs5.6bn for 217 projects having potential of adding 292MW of energy supply,” said the SBP.

A vendor or energy sale company may install more than one renewable energy source-based projects of up to 5MW each for a single ultimate owner with condition that any two or more of such projects for a single ultimate owner must not be located contiguously.

In addition to leasing of renewable energy equipment and selling of electricity, certified vendors or suppliers will also be allowed to install wind and solar projects on deferred payment sale or rental basis, with payment terms in the form of regular installments or regular rental payments from ultimate owners.

“This revision in the scheme is expected to not only attract fresh local and foreign investment in the sector but also facilitate production of clean energy in the country, helping in managing climate change,” said the SBP.

Published in Dawn, July 23rd, 2020