Asian Development Bank Lends $200 Million To Indian Agency For Renewable Energy
The Asian Development Bank continues to support the development of renewable energy in India.
The Asian Development Bank (ADB) has released $200 million in long-term debt finance to Indian Renewable Energy Development Agency (IREDA) to support the development of renewable energy projects. The $200 million debt finance is part of a larger $500 million package that the ADB has pledged to provide India for renewable energy development.
IREDA will use these funds to finance renewable energy projects up to 50% of the total capital cost of the individual projects. ADB estimates that IREDA will be able to co-finance 10 or more renewable energy projects using this debt finance.
The funding is expected to leverage $300 million in equity investments from project developers and an additional $200 million of debt co-financing. In total, the funding is expected to facilitate the addition of 990 MW of renewable energy capacity.
IREDA is India’s leading non-banking financial institution in the renewable energy sector. The agency has signed similar financing agreements with development and multi-national banks with an aim to provide cheap debt finance to project developers.
Earlier this year, IREDA signed a master cooperation agreement with the International Finance Corporation. In 2012, it received a €200.5 million low-cost loan from German development bank, KfW, and last year, the US Export-Import Bank agreed to provide $1 billion in medium and long-term loans. IREDA may also be authorized to disburse a part of the National Clean Energy Fund, which is replenished by a tax of $3.1 per metric ton of coal mined or imported in India.
IREDA recently 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.
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.
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