Asian Development Bank (ADB) has agreed to lend $200m to the Indian Government, which will be used by Indian Renewable Energy Development Agency (IREDA) for supporting renewable energy subprojects in the country.
The ADB loan marks the first step in the $500m multitranche financing facility (MFF) allowed to IREDA for its Clean Energy Finance Investment Programme.
The programme is aimed at leveraging public sector resources to support their investments in renewable energy subprojects, involving wind, biomass, hydropower, solar, and cogeneration technologies.
ADB country director in India M Teresa Kho said: "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.
"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 ten or more renewable energy projects, depending on the individual project sizes."
Financial support from ADB will enable IREDA to meet its long-term credit requirements for renewable energy development targets.
India Ministry of Finance Department of Economic Affairs joint secretary (Bilateral Cooperation) S. Selvakumar said: "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 programme will help meet the requirement by providing long-term funds for these subprojects."
The investment programme is expected to be backed by another $300m in equity and other investments from subproject sponsors.
It will also leverage a minimum of $200m as additional debt funds from unrestricted sources, which will raise the cumulative value of the program to nearly $1bn.
ADB said: "This translates into approximately 990MW of additional renewable energy capacity."