The Council on Energy, Environment and Water (CEEW) and the Natural Resources Defense Council, with support from the Shakti Sustainable Energy Foundation, organised a roundtable on renewable energy finance in India on 22nd April, 2014.
Participants included representatives from Axis Bank, ICICI, IDBI, IDFC, IndusInd Bank and MP Ensystems Advisory. The roundtable was a part of work being undertaken to understand means of increasing renewable energy financing in India – particularly for wind and solar.
During the meeting, participants highlighted their primary concerns around solar financing which include counterparty risk, lack of access to equity and refinancing options as well as other general and technology specific risks. It emerged that a lot of concerns are driven by systemic challenges like high interest rate, weak capital market and particularly the poor financial health of the DISCOMs.
With respect to the Phase II of JNNSM, the newly introduced Viability Gap Funding (VGF) scheme was applauded by all for mitigating viability risks. However, it was also suggested that a contractual link between SECI and NCEF can enhance the credibility of the VGF scheme.
Discussions also revolved around the potential of existing and new mechanisms (based on global best practices) to stimulate capacity addition, power production and potential impact on capital costs or debt tenure. After extensive discussions over their relative advantages and feasibility, a range of desirables were catalogued.
The discussion wrapped up with a call from participants for simpler policy with fewer mechanisms as well as other fiscal, financial and institutional reforms.
Also Read: Our Blog on Strengthening India’s Solar Finance Ecosystem