India’s solar power gets US$1 billion boost from World Bank
The World Bank Group has agreed to provide
US$1 billion
for India’s solar power projects, marking its largest ever financing of the renewable energy. The funding brings India closer to its goal of tripling its share of renewable energies by 2030. Home to around
a sixth of the world’s population
, India is one of the 194 nations to have signed the
COP21 agreement
in Paris in December 2015, which commits each to driving down global temperatures well below two degrees Celcius by 2030. India’s demand for energy over a
steep period
of growth has led to a rise of almost 10 percent in global energy demand since 2000. The country receives around
300 days of sunlight each year
, making solar power its most naturally abundant source of clean energy. The World Bank Group’s large-scale commitment to India’s solar programme was announced in concurrence with the
Green Infrastructure Investment Coalition’s
(GIIC) first forum centred on India’s economy, which took place at the London Stock Exchange (LSE) on 30th June 2016. Speaking at the event was
SkyPower Global
CEO Kerry Adler, who outlined the developer’s goal of building sustainably financed solar power infrastructure in India. Adler told Development Finance that the type of financial instruments used to achieve this would directly affect the scalability of solar projects in India. “[I] hope the financing from the World Bank is provided as a loan guarantee and/or credit backstop to maximise leverage,” said Adler. “This would ensure the US$1 billion investment from [the bank] can be leveraged into many multibillion dollars worth of solar projects.” India’s drive to strengthen its solar sector is one of a range of targets set by 121 countries, to which the World Bank Group is expected to commit a total of around US$1 trillion by 2030. The organiser of the GIIC forum,
the Climate Bonds Initiative
, released its
State of the Market report
for 2016 at a follow-up event at London’s Tate Modern museum on 1st July 2016. According to the report, around US$130 billion in climate-aligned energy bonds are currently in play in the green bond market. Solar energy accounts for about 18 percent of those energy assets, while only 6 percent is made up of energy efficiency assets. India’s 2022 target takes in around 100GW solar generation, while wind energy accounts for a remaining 75GW, leaving scope for larger volumes of green infrastructure investment. Addressing the audience at the GIIC forum, the Director of the
National Institute of Public Finance and Policy at India’s Ministry of Finance
, Dr. Rathin Roy, said India has yet to achieve reliable execution of its sustainable development goals, highlighting the country’s ongoing battle with bureaucracy and other forms of “crony-capitalism”.
Roy however said he wished to assure investors of India’s openness to new business, saying the country had taken in valuable lessons from other developing countries to ensure it continues on a sustainable path to growth. “Our economy is in a sweet spot, and we are aware of the dangers of overheating,” he added.
By Jack Aldane
Photo: DFID UK