Photo courtesy of Azure Power
The Indian government has set an ambitious target: to provide electricity 24 hours a day, seven days a week, for the entire country in the next few years. Today, some 300 million people, or about 25 percent of the population, have no power.
To achieve this goal, India will need to substantially increase its energy generation from a diversity of sources, including renewable energy—solar and wind projects are particularly attractive as they have short construction periods and can provide an electricity boost relatively quickly.
The country expects to expand its clean energy capacity from about 37 gigawatts currently to 175 GW by 2022, including through major increases in solar and wind generation. This will entail an estimated $200 billion in investment.
Getting to that figure will require significant input from private sector developers and investors—which is where IFC comes in.
IFC was one of the earliest international financiers of wind and solar projects in India, starting in 2009, when the country had minimal renewable energy capacity. Our main goal at the time was to show that clean energy projects were viable and could be scaled up.
Less than a decade later, IFC’s portfolio in Indian wind and solar power exceeds $700 million and includes 3 GW of solar and wind—about 10 percent of the country’s installed renewable energy capacity.
“There has been a significant jump, with significant impact on the ground,” said Shalabh Tandon, IFC’s India-based manager for Infrastructure and Natural Resources. “We still think this is just the tip of the iceberg. Today, the nature of the game is scale-up, and that requires a lot of mobilization of financing.”
Early Investor, Long-Term Partner
IFC was an early investor in Azure Power, now a leading player in grid-connected solar power. Today, the company has a portfolio of solar plants across several states and is on track to reach 500 MW of operational capacity this year.
We have also financed more than 200 MW of solar and wind plants for Sembcorp Green Infra Limited, one of the leading renewable energy companies in the country. Other IFC clean energy clients in India include Continuum Wind Energy, Ostro Energy, Acme Solar and Inox Renewables.
Renewable energy represents an increasingly large share of IFC’s power investments. Over the past five years, we have invested in more than 200 renewable energy projects around the world, supporting about 8 GW of hydropower, 4 GW of wind power, and 2 GW of solar power for emerging markets.
IFC is well placed to help India mobilize funding for renewables energy, based on our presence and knowledge of the market and relationships with both government stakeholders and foreign investors. IFC offers long-term, fixed-rate rupee debt instruments and, in August, IFC Treasury issued a five-year green Masala bond on the London Stock Exchange, the first green bond issued in the offshore rupee markets.
“Our strategy is to catalyze investments in the sector through mobilization of debt and equity from other lenders and investors including IFC’s Asset Management Company,” Tandon said.
“This helps our clients to grow and expand in line with Government of India’s vision of ramping up capacity in the renewable energy sector. The fact that we are a stakeholder in some of these projects gives comfort, as we are a long-term investor. We are long-term partners,” Tandon said.
Published in March 2016.