The Indian Renewable Energy Development Agency has announced a huge bond issue likely to be the first among a long list of similar capital raising exercises to finance the country’s renewable energy infrastructure.
The Indian Renewable Energy Development Agency (IREDA) is the primary government body looking after financial lending and incentives in the country’s renewable energy market and is expected to play a major role in the disbursement of low-cost finance to upcoming renewable energy projects in the country.
IREDA has launched tax-free bonds worth Rs 20 billion (around $307 million) to raise funds which would be used to finance renewable energy projects, including small-scale and rooftop solar power projects.
In June, Indian media reported that three power sector financial institutions – Power Finance Corporation (PFC), Rural Electrification Corporation (REC), and Indian Renewable Energy Development Agency (IREDA) – were to raise around $600 million through tax-free bonds. The reports suggested that these entities would provide finance at 10.5%, which is comparatively cheaper than the rates on offer by the Indian banks.
IREDA has been tied up with several international development banks to offer low-cost finance to private project developers. Earlier this year, the International Finance Corporation (IFC) signed a master cooperation agreement with IREDA to facilitate low-cost financing in India. IREDA is looking to raise funds from all possible sources as the renewable energy installation targets set by the government are extremely high. By March 2022, the Indian government plans to have 175 GW renewable energy capacity operational. IREDA is expected to issue more of such tax-free bonds in the future in addition to signing financing deals with international banks.