The World Bank is to provide US$100mn in funding for renewable energy projects in India’s booming market.
The development bank will provide US$98mn in debt to the Indian Renewable Energy Development Agency (IREDA), which will on-lend the money to states in India for solar projects. A further US$2mn will be available in grants.
IREDA has already earmarked 750MW and 250MW solar parks in the Madhya Pradesh region, as it looks to move towards India’s national renewable energy target of 175GW of output by 2022.
India’s renewables market is viewed as one of the world’s most promising. A recent report by the Institute for Energy Economics and Financial Analysis (IEEFA) predicted a dramatic market share gain by renewable energy, with a sustained deflation in renewable tariffs.
Over the past two years tariffs have fallen by 50%, with a record low solar energy tariff of the equivalent of US$38 per MWh being reached this year. This, the institute finds, will result in peak coal being reached by 2027, at no more than 10% above current levels.
“A combination of India’s ambitious energy policy and ongoing solar and wind energy tariff deflation will enable India to catalyse US$200-US$300bn of investment in renewable energy infrastructure over the coming decade. Improvements in energy efficiency and reduction in technical and commercial losses will deliver better electricity production per coal tonnage. To conclude, the transformation will ensure India to support its economic growth while keeping greenhouse gas emissions in check,” says Tim Buckley, director of energy finance studies at the IEEFA.