India’s goal to dramatically ramp up solar and wind energy capacity could get a major boost through two fast-growing financing innovations—green banks and green bonds—according to new analysis released by the Indian Renewable Energy Development Agency (IREDA) in partnership with the Council on Energy, Environment and Water (CEEW) and the Natural Resources Defense Council (NRDC)
The reports released are a part of CEEW and NRDC’s work on finance under the ‘Clean Energy Finance Initiative’. As India surges ahead with its RE plan, the availability of finance has not kept pace with the commitments made by developers. Establishing a green bank and accessing green bonds, the reports show, could help overcome this key market barrier.
India needs as much as INR17.5 trillion, approximately $264 billion, in financing to reach its target of producing 160 gigawatts of power from solar and wind energy by 2022. The clean energy target is the centerpiece of India’s climate pledge announced in the international Paris climate agreement recently signed by more than 170 countries at the United Nations.
Growing at a rapid pace, India is currently Asia’s third largest clean energy market, and is poised to become the largest clean energy market in the next decade.
Releasing the reports, Minister Piyush Goyal, highlighted the enormous opportunity for clean energy growth in India. “We are committed to achieving our renewable energy targets,” he said and added that more can be done with longer-term and low-cost international financing while urging other countries to do their part in taking stronger action on climate change.
“Attractive low-cost finance for clean energy projects is crucial for tapping into India’s vast clean energy potential and for transforming India into a low-carbon economy. In 2015, India was the fourth largest issuer of green bonds in the world raising debt worth $1.1 billion, ahead of several major economies such as China, Japan, Norway and the UK. Scaling up the market for green bonds could further reduce the cost of capital, stimulate the flow of finance from institutional and retail investors, and expand the base of issuers. India is also ready to be home to a Green Bank, which could offer solutions to overcome local financing barriers to clean energy,” said, Arunabha Ghosh, CEEW’s CEO.
“The analysis on green bonds and green banks and what this means for clean energy advancement in India has come at an opportune time. It was valuable to collaborate with strong knowledge partners like CEEW and NRDC and we look forward to working together to unleash attractive finance for clean energy so that India can achieve its targets,” said IREDA Chairman K.S. Popli.
Link to Report on Green Banks: http://bit.ly/1pZZPpc. Link to Report on Green Bonds: http://bit.ly/26S9j7B