Financing the Indian green energy dream: scale, risk nuances and policy response

India’s ambitions of increasing its non-fossil fuel based energy capacity to 500 GW by 2030 are formidable and present a unique set of opportunities and execution challenges. The debt requirement for an additional 340 GW Renewable Energy (RE) target works out to ~ Rs. 14 Lakh Cr over a period of 9 years. The majority of the current discourse around the Indian RE story has centred around speed and scale of the installed capacity ramp up. The modular nature of executing RE projects puts them on the other end of the construction complexity spectrum as compared to conventional power generation plants. However, there are some unique characteristics of RE projects which puts them in a different class of risk from the financing perspective compared to conventional power plants. A large amount of direct and indirect public monies will be involved in the future in the RE finance pie, and hence we felt the need for larger discourse on specific nuances of credit risk for RE debt as well as study the current policy responses to RE finance. We hope that these insights feed into policy making for attracting appropriately structured, priced and well monitored RE finance. Supporting India’s transition to RE capacity calls for a change in the existing framework of RE finance based on the guiding principles of transparent and consistent disclosures, efficient and timely data warehousing, and encouraging public discourse on material changes to existing policy. In this paper, we attempt to present some pathways to achieving these objectives.