As India prepares to recover from the COVID-19 pandemic, the government is proposing several measures to get the economy back on track. A huge strategic opportunity lies in investing in clean energy that creates jobs, improves energy security, saves the environment, and is good for India and the world. India’s Ministry of New and Renewable Energy is taking early steps to keep the momentum growing on clean energy expansion through actions such as reiterating a must-run status for renewable energy, extended commissioning time, releasing subsidies, and providing viability gap funding.
These measures would provide immediate liquidity to the clean energy market and assurance to the investors. In the long-term though, strengthening IREDA, the leading public renewable energy financier, by funding the IREDA Green Window can be a decisive and far reaching move. Capitalizing IREDA, as a part of the stimulus plans, would send a strong signal to the financiers and the industry about the country’s commitment to clean energy.
The good news is that IREDA is already being actively considered for membership by the global Green Bank Network (GBN). GBN is a membership organization formed to foster collaboration and knowledge exchange among existing Green Banks from across the world including the Australia, Japan, Malaysia, the United Kingdom and several states in the United States. India’s Tata Cleantech Capital Limited joined the GBN as the first private sector member during the Climate Week in New York in 2019. The GBN members have globally supported clean energy projects worth $50 billion accounting for 25.5 million tons of avoided carbon dioxide equivalent emissions.
Joining the GBN would enable IREDA to be a part of an international platform and share best practices and lessons learned and help in its own journey to set up the Green Window. The mission-driven Green Window, with access to low-cost capital, will provide IREDA the flexibility to play a market making role by using strategies such as risk mitigation, aggregation of small projects to diversify risk and to scale, strategic public-private co-investments, demonstration projects and market development activities.
This is a good time to invest in the IREDA Green Window and India’s clean energy future as solar and wind prices continue to fall. Moreover, global oil prices are at a historic low, freeing up public capital and offering the possibility to eliminate or reduce fossil-fuel subsidies. India’s support for the Green Window could also attract more concessional funding, such as from the Green Climate Fund, and open up the Indian clean energy market to new classes of international investors with the goal to achieve Paris Agreement targets. Investment in clean energy is also an investment in improving public health—compromised by COVID-19—including the benefits of clean air, clean water and increased climate action.