The US Export-Import Bank has played a very important role in shaping the Indian renewable energy market into its current form. The bank now plans to provide further assistance to promote renewable energy infrastructure development in India.
The bank has offered $1 billion in low-cost loan to India for aiding the development of renewable energy projects. The loan will be provided to the Indian Renewable Energy Development Agency (IREDA) which would in turn disburse it to various renewable energy projects across India.
US Ex-Im Bank has been among the prime lenders to solar power projects in India. It provided debt financing to several projects which became the first solar power projects to be commissioned in India. The largest solar thermal power project in the country has also been financed by the bank. A number of projects under the National Solar Mission have successfully approached the bank.
The bank offers debt financing at about one-third the cost of what Indian banks offer. Cheap debt financing is among the major reasons for the explosive growth in the Indian solar power sector and the fall of tariffs to less than a third of what they were in 2009–2010.
However, cheap loans weren’t the only thing that came from US Ex-Im Bank’s basket. Solar modules from American manufacturers also made a huge mark in the Indian market. First Solar is the biggest beneficiary of this system. By some estimates, the company enjoys about 30% of the market share in India.
This proposed loan will also carry a caveat that beneficiaries will have to import and use products manufactured by American companies, although the loan can be used for procuring a maximum of 30% of domestically manufactured equipment as well.
It is interesting to note than up until a few months back American module manufacturers were facing possible anti-dumping duties from the Indian government, which had intentions of promoting domestic module manufacturers. In August, however, India announced that it will no longer pursue anti-dumping investigations against any country, recognising that such measures may be in violation of the WTO rules.
India is planning to significantly boosts its installed renewable energy capacity and plans to invest $100 billion over the next few years.
Image Credit: US Government
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