India Seeks $3 Billion From Development Banks For Solar Power Projects

To kick-start the financial arrangements for the nearly 100 GW planned capacity addition over the next 7 years, the Indian government is seeking $3 billion from international development banks.

The government is said to be in talks with the Asian Development Bank, the World Bank, KfW, the Japan International Cooperation Agency (JICA) and the Japan Bank for International Cooperation (JBIC), the European Investment Bank (EIB), and France’s Agence Française de Développement (AFD), to raise low-cost debt finance for large-scale as well as rooftop solar power projects.

Nearly all of these banks have already made significant investments in the Indian renewable energy sector, specifically solar power projects. These banks have provided low-cost debt for solar power projects allocated to developers under the National Solar Mission as well as auctions held under the state solar power policies.

The US Trade and Development Agency and the US Export-Import Bank have already signed agreements with the Indian government agencies to provide a total of $3 billion in debt funding.

The Indian government expects a total investment of $160 billion in the country’s renewable energy sector over the next 5 years. One can expect that a large portion of this would come from international private project developers and development banks, although Indian banks have started raising funds through green bonds as well. The government may also consider launching tax-free green infrastructure bonds to attract domestic long-term investments. In February, Indian banks and foreign investors pledged to provide funding worth $57 billion for renewable energy capacity addition in the country.

India current has an installed solar power capacity of around 3 GW, meaning that it has to add 97 GW over the next 7 years.