What is the Access to Energy scheme under the KfW development bank line at the Indian Renewable Energy Development Agency (IREDA), and who can use it?

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It lends for renewable energy projects in areas where grid power averages less than 2 to 3 hours during the 5 pm to 11 pm peak. Minimum loan is rupees (Rs) 50 lakh, up to 70% of project cost. A 5% milestone incentive and a 22.5% reserve that can become a grant are printed. The stated objective is to increase the supply and use of sustainable clean energy services in rural areas through better access to financing for project developers. The document sets a site test: projects should be in areas where electricity from the national grid averages less than 2 to 3 hours during peak hours, 5 pm to 11 pm. Minimum loan from IREDA is Rs 50 lakh, unless a scheme or programme exempts it. Under KfW's terms, the loan to each borrower may not exceed 4 million euro. IREDA lends up to 70% of project cost. Promoter contribution is at least 30%, and the maximum debt to equity ratio is 3:1. Repayment is up to 7 years, depending on cash flows and the debt service coverage ratio (DSCR), after implementation and a moratorium of 3 to 9 months from the commercial operation date (COD). All techno-commercially viable renewable energy projects are eligible, subject to the notes below. It should follow international best practice on environmental and social aspects. In a hybrid model, installed conventional capacity may not exceed installed renewable capacity. Biomass gasifiers are not eligible under this scheme. Projects under energy service company (ESCO) modes are eligible. Prior approval from KfW is needed, and a no-objection certificate from KfW is a must for sanction. 5% of the loan amount as a milestone-based incentive, adjusted against the outstanding loan on timely commissioning and repayment of 20% of the loan amount. 22.5% of the loan amount as debt service reserve money. If the sub-loan is never in payment default for more than 90 days during its tenure, and the borrower has achieved the operational service delivery agreed with IREDA, this becomes a grant at the end of the tenure, offset against the final debt obligations. 12.5% of the loan amount goes into a portfolio risk reserve account, which IREDA can use to recover up to 70% of an overdue amount that exceeds a sub-borrower's reserve. My reading: this one is a lender-side reserve, not a payment to the borrower. Security coverage ratio above 1.0, not counting the 40% credit risk that KfW covers. Average DSCR of at least 1.10 and minimum DSCR of at least 1.0. Additional security of a bank guarantee or fixed deposit receipt equal to 10% of the loan. Loss-making applicants "may not be considered as Deviation" under this scheme, subject to 100% upfront promoter contribution before the first disbursement. My reading: they can be taken up without a special exception. A trust and retention account or escrow account between IREDA, a trust bank and the borrower, acceptable to both KfW and IREDA. My reading: an agro-processing or cold chain business, or a mini-grid operator, in a village with poor grid supply could look at this. A factory on a good industrial feeder fails the site test. The scheme is also subject to availability of funds, so ask IREDA whether the KfW line has room.

What is the Access to Energy scheme under the KfW development bank line at the Indian Renewable Energy Development Agency (IREDA), and who can use it?

What the scheme is for

Loan terms

Conditions on the project

The incentives printed in the scheme

What the appraisal checks

Who this could suit

Example: a Rs 1.20 crore project

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