New Delhi, 25 October 2016
Today, the India Innovation Lab for Green Finance (the India Lab) announced endorsement of three innovative investment vehicles that will help drive millions of dollars of needed investment to India’s clean energy and green growth targets. This announcement is in partnership with the India Lab’s public and private Lab Members, including the Indian Ministry of New and Renewable Energy, the Ministry of Finance, the Indian Renewable Energy Development Agency (IREDA), the Asian Development Bank, ReNew Power, the World Bank, and the development agencies of the French, UK, and US governments, among others.
The three endorsed instruments, which were selected from among a highly competitive pool, and refined and developed over the course of a year, will now move forward for piloting in India with the support of the India Lab’s members. They include a rooftop solar financing facility, a peer-to-peer lending platform for green investments, and a currency exchange hedging instrument.
The India Lab also announced today that a new call for ideas for innovative green finance instruments is now open for the India Lab’s 2016-2017 cycle. The call for ideas is open to everyone and the deadline is December 23, 2016, at www.climatefinanceideas.org.
“The investment vehicles launched by the India Innovation Lab for Green Finance today show significant potential to catalyze investment to India’s renewable energy targets. They offer exciting new investment opportunities to help accelerate clean energy in India.” – Mr. Santosh Vaidya, IAS, Joint Secretary, Ministry of New and Renewable Energy
“Driving investment for renewable energy and energy efficiency in India will be crucial in the next several years. These green finance instruments endorsed by the India Lab can go a long way towards that goal.” – Mr. Krishan Dhawan, CEO, Shakti Sustainable Energy Foundation and Host of the India Innovation Lab for Green Finance
“Our analysis for the India Lab has demonstrated that these three green finance instruments can overcome investment barriers and better meet the needs of investors interested in opportunities in clean energy and green growth in India. Together, these pilots can drive millions in new investment.” – Dr. Gireesh Shrimali, India Lab Secretariat and Director of Climate Policy Initiative in India
“IFC values the role of the India Lab and we’re confident that its endorsement of the Rooftop Solar Private Sector Financing Facility will help put it in action to mobilize the needed private finance for India’s rooftop solar power industry.” – Vikram Widge, Head of Climate Finance and Policy at IFC, World Bank Group
The new instruments endorsed by the India Lab today are:
- The Rooftop Solar Private Sector Financing Facility aims to drive capital at a lower cost of financing for developers of rooftop solar projects, by providing long term debt financing through securitization. It also aims to demonstrate the commercial viability of sustainability-focused, asset-backed securities for the Indian rooftop solar sector. Over 2017-2022, the Facility can mobilize USD $320 million of private capital for rooftop solar power. It has the potential to help raise further investment, beyond 2022, by supporting rooftop solar power developers to grow and by demonstrating the commercial viability of the sector.
- Loans4SME is a peer-to-peer lending platform that would increase access to debt financing for small and medium enterprises (SMEs) for renewable energy and energy efficiency initiatives, by connecting them directly with lenders. Loans4SME has the potential to mobilize around USD $2.2 billion in debt financing for SMEs in renewable energy and energy efficiency by 2022, and thereby help in providing access to finance almost 800 MW of rooftop solar projects.
- The FX Hedging Facility aims to facilitate large-scale foreign investment into renewable energy in India by providing a cheaper currency hedging solution. Currency risk – the risk of unexpected devaluation when investing in a foreign currency – is the greatest risk facing potential foreign investors in renewable energy. It requires currency hedging, but commercially available currency hedging products can be expensive. The FX Hedging Facility can reduce the cost of currency hedging by around 30% and has the potential to mobilize a minimum of $9 of foreign debt per dollar of donor grant.
The India Innovation Lab for Green Finance is a public-private initiative in India that identifies, develops, and accelerates innovative solutions to drive more investment for green growth in India. The India Lab has been endorsed by the Indian Ministry of New and Renewable Energy. It is hosted and funded by Shakti Sustainable Energy Foundation, with additional financial support from the UK Government, the David and Lucile Packard Foundation, and the Oak Foundation. Climate Policy Initiative in Delhi serves as the Secretariat and analytical provider.
India and the EU – Maggie Young
US – Elysha Davila