Indian Renewable Energy Financial Landscape Overview

Currently, financing costs represent between 50 and 60 percent of total renewable project costs in India.[1] As a result, low cost financing will be a primary driver of renewable energy generation project costs moving forward.

Indian Solar Tariff Breakdown, Asian Development Bank

Over the past decade, Indian renewable energy generation capacity has grown at an annual rate of 15%. Meanwhile, growth in annual investment into Indian renewable energy generation projects has remained relatively stable at 5%. Declines in the cost of solar modules and other capital equipment have enabled renewable energy generation capacity to grow, even at stabilized investment levels. This trend is not expected to continue, as changes in financing costs will play a larger role in energy generation project costs than equipment-related costs. The rest of the blog will provide an overview of how much investment has been driven into India's renewable energy sector.

Since 2010, there has been a total of $108.82 billion invested directly into building new renewable energy capacity.[2] This investment has been spread across asset financing—new builds, small-scale solar, venture capital / private equity, and public market equity raising.

In 2020, total new investment in renewable energy was $6.88 billion, which was a 35% decrease from 2019 totals. These projects may be financed off the owner’s balance sheet, or through financing mechanisms such as project finance, syndicated equity from institutional investors or project bonds underwritten by banks. In 2020, $5.7 billion of investment was directed towards asset financing for new projects, of which 68% was allocated to solar assets. Asset financing activity in wind and solar sectors dropped by 30% and 32% respectively compared to 2019, yet 2021 is looking like it will rebound with $5.3 billion already raised year to date. [3]

Mergers and acquisition activity is another important part of the Indian renewable energy financing picture. These deals do not provide new money for technologies and developers but they enable early investors to make exits and redeploy capital on fresh opportunities. So far in 2021, India has outpaced US and China, which were the leading the markets of 2021. Adani Enterprises Ltd’s sale of 20% stake in Adani Green Energy Ltd to TotalEnergies SE for $2.5 billion was the largest contributor to the jump in volumes. The transaction also includes transfer of a 50% stake in Adani’s 2.35GW portfolio of solar assets to Total SE. Greenko Energy Holdings’ acquisition by Orix Corp for $961 million is the second largest acquisition during this period. This deal marks Orix’s largest overseas investments in renewables. [4]

While debt primarily has come in the form of loans from lenders via asset financing, bond issuances have become more common in India and enable access to a wider pool of investors. In the past 6 years, India has totaled $28 billion of green bond issues, raising a total of $3.5 billion in 2020 which was a 39.6% decrease from 2019, when issues reached $5.8 billion. [5]

In BNEF’s “Uncovering the Hidden Universe of India’s Green Bonds,” of the 245 green bond issues with price available, BNEF found that 213 are trading at a premium—primarily owed to the industry’s success and falling bank interest rates. 86% of green bonds issued since the beginning of 2014 have had a fixed and non-zero coupon rate—with the average rupee-denominated coupon rate for private players holding at 11%. Additionally there have been 28 dollar-denominated green bonds by 13 issuers, totaling $10.4 billion or about a third of all green bonds issued. According to the data, the average coupon rates for private entities for dollar denominated bonds stands at 5.55%. Medium tenor bonds (5 to 10 years) have been the preferred option since 2016.

Overall total clean energy finance transactions in 2020 were $12.8 billion. These deals were spread across asset financing (new build), green bonds, private equity or venture capital funding of renewable energy firms, refinancing of operational assets as well as mergers and acquisitions.


[1] CAP, Renewed U.S.-India Climate Cooperation: Mobilizing Foreign Capital for a Green Energy Transition in India

[2] BloombergNEF Renewable Energy Investment Tracker, new investment refers to investment directly into renewable energy capacity, and equity raised by specialist companies in renewables and related areas such as energy storage

[3] 1H 2021 India Renewable Energy Market Outlook, BloombergNEF

[4] 1H 2021 India Renewable Energy Market Outlook, BloombergNEF

[5] Uncovering the Hidden Universe of Green Bonds, BloombergNEF

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