One of the biggest factors that have driven Solar Power technology successfully towards becoming the mainstream source of power in near future is the amount of financial aid being injected by government and other agencies.
Government funding programs are the source of power that acts as the key for the development of the Solar Power market. These funds have played a major role in the stimulation of growth, enabling generation of electricity in rural and remote areas and supporting research and development and demonstration of technology.
Stimulation of Market
Two techniques have driven market stimulation:
1. Reduction of the costlier generation of solar electricity compared to the power generated from traditional fossil fuel resources.
2. Reducing the high cost of installing photovoltaic (PV) panel systems in both cities and remote areas where they can offer long-term, cost effective solutions.
Scenario of On-Grid Projects
• Financial help is offered in several countries from both local and federal governments. The mode of aid can vary from tax credits for purchasing Solar Power systems to rebates for the purchase.
• The aid can also be in the form of offering higher rate for buying back excess electricity generated by the photovoltaic system.
It is because of this type of rate-based subsidies that have helped in making solar energy markets successful in Japan and Germany. In some countries, even banks are working along with governments and utility companies for offering low-interest finance to help consumers buy the systems.
Local government can also provide financial aid, especially in areas where there is concern for the local environment or for the development of employment opportunities in the area. There are some nations that employ free-market dynamics such as Solar Power exchange for encouraging the purchase of electricity generated from Solar Power at commercial rates.
Scenario of Off-Grid Projects
In the case of off-grid Solar Power projects, the development aid funded by bilateral and multilateral aid agencies are offered in the form of:
• Loans for development of infrastructure
• Grants and loans for providing technical know-how
• Equity funds for new undertakings
• Export credit guarantee
There are many agencies that have developed programs focused especially on solar activities. The leading off-grid projects in countries like Philippines and Indonesia have installed photovoltaic systems in remote areas.
Scenario for Businesses
Businesses in certain developing and developed countries can apply for funding to create or expand their Solar Power business activities. These funds can be received from a range of varied organizations including:
• Regional or international private institutions
• Investment funds specializing in solar energy
• Charitable institutions specializing in solar energy
The funds can be offered in the form of loans or grants at better rates or in the form of equity injection.