NEW DELHI, INDIA -- The Asian Development Bank (ADB) and the Government of India have signed a $200 million loan agreement to support lending by Indian Renewable Energy Development Agency (IREDA) to eligible renewable energy subprojects in India.
The loan is the first tranche of a $500 million multitranche financing facility (MFF) to IREDA for the Clean Energy Finance Investment Program. The Program aims to leverage public sector resources to catalyze private sector investments in renewable energy subprojects including wind, biomass, hydropower, solar, and cogeneration technologies.
“ADB’s 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 M. Teresa Kho, Country Director for ADB in India, who signed the loan agreement on behalf of ADB. “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.”
ADB funds will partly meet the long-term credit IREDA needs to meet its renewable energy development target. IREDA is a government-owned nonbank financial institution established to promote renewable energy investment and under the administrative oversight of the Ministry of New and Renewable Energy.
“Lack of sufficient long-term debt financing for renewable energy projects in India is one of the major challenges to sustaining high levels of renewable energy deployment. This program will help meet this requirement by providing long-term funds for these subprojects,” said S. Selvakumar, Joint Secretary (Bilateral Cooperation), Department of Economic Affairs, Ministry of Finance, who signed the agreement for the Government of India.
The program is expected to leverage an estimated $300 million in equity and other investments from subproject sponsors, and at least $200 million of additional debt funds from unrestricted sources for a total investment program of around $1 billion. This translates into approximately 990 megawatts of additional renewable energy capacity.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.