'Must lower capital costs for renewable energy projects'
millenniumpost , Sep 09, 2015
Lending agencies need to bring down the cost of capital for renewable energy projects after the government created conditions for the purpose, New and Renewable Energy Secretary Upendra Tripathy has said. “The government has put in place an elaborate ecosystem to support green projects and it is now up to lending agencies to help bring down the cost of capital and technology to realize the target of generating 170,000 MW of renewable energy,” Tripathy said while addressing a FICCI conference on ‘Green Bonds’ here.
India has set a target of 175 GW of renewable energy capacity by 2022, which includes 100 GW of solar power, 60 GW of wind power, 10 GW of biomass-fired power and 5 GW of small hydro power.
He further said that the cost of credit is the most crucial component for undertaking renewable energy projects as the cost of technology is difficult to bring down unlike other inputs such as land and manpower costs.
He urged lending agencies, including banks, financial institutions and non-banking financial companies (NBFCs), to take ethical responsibility for funding green projects by issuing dedicated ‘green bonds’.
Tripathy enumerated various initiatives of the central government to make funding of renewable projects like the 25-year power purchase agreement, establishment of escrow account, concessional excise and customs duties and setting up of a green energy corridor for evacuation of power, priority sector lending for renewable energy projects up to Rs 15 crore, home loans clubbed for rooftop projects, etc.
HSBC Bank Plc, UK’s Managing Director and Global Head of Public Sector & Sustainable Financing, Ulrik Ross said, “HSBC believes that scale in the green bond market can only be reached by introducing government sponsored incentive structures for green bonds, and we believe India has the ability to do so.”
FICCI Director General Arbind Prasad said, “Green bonds are an attractive investment proposition with an opportunity to support climate-related projects.