Govt setting up $1.25 bn renewable energy fund2 min read . Updated: 05 Feb 2016, 03:10 AM IST
State-owned firms such as PFC and REC commit $300 mn to the fund, which is also backed by private institutions
New Delhi: The government is in the process of setting up a $1.25 billion fund, backed by state-owned and private institutions, to finance renewable energy projects.
The move will help in the scaling up of clean energy generation from 37 gigawatts (GW) at present to 175GW by 2022, according to a senior government official.
State-owned institutions such as Power Finance Corp. Ltd and Rural Electrification Corp. Ltd have already committed a total of $300 million to the fund, Varsha Joshi, joint secretary in the ministry of new and renewable energy, told a gathering of power industry executives and bankers at the India Investment Summit organized by the finance ministry on Thursday.
“This fund will make equity and mezzanine investments in renewable energy projects and will be modelled like the National Infrastructure Investment Fund (NIIF)," Joshi said.
The government wants to make renewable power projects, including solar energy, more attractive, she said.
The NIIF is being set up with a corpus of about ₹ 40,000 crore, partly funded by private investors, to finance infrastructure projects, including stalled ones.
To scale up renewable energy output as planned, India will need an investment of $140 billion over the next six years.
According to official estimates, financial institutions have already committed about $57 billion to support nearly 78GW of renewable energy, slightly less than half of the target.
At present, about 70% of India’s 284GW power capacity is fired by fossil fuels such as coal, gas and oil. Large hydroelectric projects account for 15%, while other renewable sources account for about 13% and nuclear power about 2%.
The proposed target of 175GW of renewable energy output assumes at least 100GW from solar, 60GW from wind, 10GW from bio-power and 5GW from small hydro-power.
Industry executives said that the central government’s commitment to cut carbon emissions and the recent revision in the power tariff policy gives confidence to investors in renewable energy.
“The 175GW renewable energy target is further complemented by India’s commitment at the latest Paris climate conference to reduce carbon emissions by 30-35% and increase renewables to 40% of the energy mix by 2030," said Tulsi Tanti, chairman of wind turbine producer Suzlon Group, which recently ventured into the solar power segment.
Tanti said that the revised power tariff policy announced on 21 January will boost interstate sale of wind power as it proposes no transmission charges on such sales.
Solar power companies would get an impetus from the obligation of utilities to purchase 8% of total consumption from solar energy producers, he said.
Mayank Aggarwal contributed to this story.