The Indian government and Indian corporates have started taken measures to raise the potential billions of dollars required to reach the ambitious renewable energy targets.
Indian Export-Import Bank sold $500 million of green dollar bonds with a yield of 2.75%. With a huge installed capacity target of 175 GW renewable energy by 2022, the Bank is expected to issue more bonds raising up to $1.5 billion over the next 2 to 5 years.
The bank is expected to use the funds raised to finance renewable energy projects through low-cost debt. The Indian Export-Import Bank has been tapped by the government for renewable energy debt financing as the conventional banks have an overstretched exposure towards the Indian power sector companies which have not been performing well for several years.
A private sector bank, Yes Bank, raised about $150 million in February through the country’s first green bond. The bank had a target to raise around $75 to $80 million through the bond issue.
To achieve an installed renewable energy capacity of 175 GW by 2022 India needs to install 140 GW of new capacity over the next 7 years. Indian banks and foreign investors have pledged to provide financing worth $57 billion. This would be enough to install 70 GW.
The Indian government is planning to tap several multinational and international development banks to finance its large-scale renewable energy projects. A number of banks, including the Asian Development Bank, Germany’s KfW, and Japanese development banks, have already signed agreements with Indian authorities like the Indian Renewable Energy Development Agency (IREDA) to provide low-cost debt financing for renewable energy projects. These funds are expected to start flowing over the next few months as the central government opens tenders for large-scale solar power projects.