As competition among renewable energy project developers in India continues to increase the Indian Government is planning to step up investment in the sector to keep the momentum going.
The Indian Minister for Power, Coal, and Renewable Energy, Piyush Goyal, recently announced that his government will soon float an equity fund for investment in renewable energy projects of around $1 billion, and will initially invest in projects developed by state-owned companies.
While the minister did not give any further details about the fund, it may function on the lines of UK’s Green Investment Bank or other similar investment programs. The minister also did not inform how the corpus of the equity fund would be be accumulated, however, he did mention the National Clean Energy Fund during the announcement. Revenue collected from the coal tax (at ~$3.0/tonne) is pooled into the National Clean Energy Fund. The government expects to collect $4 billion a year through the coal tax over the next 3-4 years. While the fund remains largely under-utilised, especially for renewable energy projects, the government now seems to have set its priorities right for its utilisation.
A number of state-owned companies and organisations have been assigned targets to set up renewable energy projects, especially solar power projects. Coal India Limited, NTPC Limited, NHPC Limited, Neyveli Lignite Corporation, and the Indian armed forces have been assigned targets to set up solar power projects. While arranging debt financing for such projects would not be an issue, these organisation may face hurdles in financing the equity portion of the projects, thus the proposed equity fund will prove critical for them.
India has set eyes on the target of 175 GW operational renewable energy capacity by 2022. This includes 100 GW installed solar power capacity, 60 GW wind energy capacity, and 15 GW from other renewable energy technologies like biomass, small hydro, etc. The Indian government has also asked several state-owned organisations to raise funds for renewable energy projects through green bonds.
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