India’s largest power generation company, publicly-owned NTPC Limited, has finally issued a green bond months after the government directed several companies to raise funds to finance renewable energy projects.
NTPC Limited recently reported to the Indian bourses that it raised Rs 2,000 crore (US$300 million) through Green Masala bonds now listed at the London Stock Exchange. The company offered overseas investors an extremely attractive annual coupon rate of 7.48%. Green Masala bonds are rupee-denominated bonds issued to overseas investors.
The proceeds of the green bond issue will be used by the company to finance renewable energy projects, and the bulk of it is expected to be directed toward solar power projects. NTPC has extremely ambitious renewable energy targets and, over the last few months, has emerged as the leader in India’s march toward its plan to have 100 GW of installed solar power capacity by March 2022.
Recently, NTPC announced plans to significantly increase the share of renewable energy in its energy mix in the medium to long-term. The company plans 128 GW of power generation by 2032, out of which 28% is expected to come from renewable energy. The company’s current power generation capacity stands at 47 GW, of which renewable energy constitutes 11%.
It also revealed plans to auction off 5 GW of additional solar capacity. The initial plan would have seen an auction of 10 GW of solar capacity.
A number of Indian companies and banks have issued green bonds over the last few months as the demand for renewable energy funding has increased sharply. More recently, private-owned Axis Bank became the first company to issue a certified green bond. Axis Bank raised $500 million through the bond, which is also listed at the London Stock Exchange.