The government of India and the Asian Development Bank (ADB) have signed a joint loan agreement to steer funds to the Indian Renewable Energy Development Agency (IREDA), which will dispense monies to eligible clean energy projects in India.
The tranche of money is the first in a wider $500 million multitranche financing facility (MFF) being supplied to IREDAs Clean Energy Finance Investment Program, which aims to leverage public sector resources to act as a catalyst for further private sector investment in solar, wind, biomass and other clean power projects in the country.
The funds from ADB will meet part of IREDAs long-term credit needs as the agency works towards hitting its renewable energy development target. As a government-owned non-bank institution, IREDA was created by Indias Ministry of New and Renewable Energy (MNRE) to promote clean power investment under the Clean Energy Finance Investment Program.
The program will leverage a further $300 million in equity and other investments from subproject sponsors, and an estimated $200 million in additional debt funding from other unrestricted sources. Allied to the initial $500 million in multitranche financing, total investment in the program will reach $1 billion which the MNRE calculates will translate into some 990 MW of new clean energy capacity.
"ADBs loan will help the government scale-up renewable energy infrastructure by facilitating investments in projects that will balance the objectives of growth, climate change, and energy security," said ADB India director Teresa Kho. "ADB funds can be used to finance up to 50% of the subproject cost, and the first tranche loan will help IREDA debt finance around 10 or more renewable energy projects, depending on the individual project sizes."
The joint secretary for Indias Department of Economic Affairs, Ministry of Finance, S. Selvakumar, said that a lack of sufficient long-term debt financing had hamstrung Indias renewable energy deployment objectives. "This program will help meet this requirement by providing long-term funds for these subprojects," he said.