Green Windows as Instruments of Green Recovery in India

Co-authored with Poonam Sandhu and Madhura Joshi.

Green Windows can be instrumental in growing private investment in India’s clean energy markets and guiding the country on a path to a green recovery as per experts speaking at an online discussion organized by NRDC and our partners the Indian Renewable Energy Development Agency (IREDA), the CEEW Centre for Energy Finance (CEEW-CEF), and Climate Trends today.

India’s Ministry of New and Renewable Energy (MNRE) has taken concrete steps to support renewable energy during the pandemic. However, public funding alone is not enough to meet the amount of investment needed for a low-carbon, climate resilient economic transformation. To attract private capital, based on stakeholder feedback, MNRE had announced setting up India’s first Green Window within IREDA in December 2019.

A Green Window is designed as a dedicated facility within an existing institution and is driven by its mission to develop markets that are otherwise financially underserved.

MNRE Joint Secretary Sh. Bhanu Prasad Yadav, who provided special remarks during the discussion, highlighted the unique opportunity for a green recovery in these challenging times: “This is an opportunity to spur a sustainable recovery and create a positive multiplier effect on the economy. IREDA, along with partners, are playing a key role to finance critical climate projects, most notably in transforming India's energy mix. The more we de-risk the sector, the more people are willing to invest. Financing tools such as the Green Windows, will play a transformational role in greening the country.”  

Mr. Chintan Shah, IREDA’s Technical Director has been leading the development of the Green Window operational plan. Mr. Shah told the audience about several innovative finance mechanisms IREDA is piloting and how the Green Window can bring them together.  “The role of public finance institutions such as IREDA is to catalyze the development of new and promising sectors of the economy. IREDA will keep inventing spaces so that the market can grow in a way that can be scalable and replicable,” remarked Mr. Shah. Dr. P K Das, the new Chairman and Managing Director of IREDA added, “As India rebuilds the economy recovering from the COIVD-19 pandemic, IREDA’s mission is fully aligned with the goal of Government of India through MNRE to promote investment in renewable energy for sustainable development. We are working on various front & partnering with all stakeholders for its effective implementation.”

For the Green Window to make a significant impact in addressing risk barriers, it needs a dedicated pool of capital. International investors such as the Green Climate Fund are interested. Mr. Tony Clamp, who directs the Private Sector Facility at the Green Climate Fund had this to say: “The Green Climate Fund’s Private Sector Facility counts on partners like NRDC to help us achieve our goal of catalyzing private capital for climate. The IREDA Green Window is an innovative concept and aligns with our country ownership approach to create local climate compatible financial markets. We look forward to our continued work with NRDC, IREDA and other valuable partners to promote renewable energy in India.”

Dr. Surendra Babu, Deputy General Manager at  NABARD, which is a leading development finance institution in India and also an Accredited Entity for GCF in India, concurred on the Green Window objectives: "Along with private investors and public capital, we seek to create livelihoods as well as robust financial ecosystems for green development, equitable access and sustainable growth. The Green Window has two aims—creating capital demand, and offsetting credit risk."

India’s road to a green recovery will not be easy. There are systemic risks such as untested business models, mismatch between tenure of loans and capital raised by financial institutions as pointed out by Mr. Manish Chourasia, Managing Director Tata Cleantech Capital (TCCL). However, as Mr. Chourasia pointed out, “The demand for green finance is enormous, expected to be over $1.5 trillion for building sustainable assets including clean energy and clean transportation.” Drawing on TCCLs existing partnership with IREDA, he stressed “We will further explore how to synergize with the IREDA Green Window.”

Scale of investments as well as the development of a variety of financial products are needed to create a robust climate financing ecosystem. Mr. Doug Sims, Director and Senior Advisor, Green Finance Center, NRDC elaborated, “fundamentals of the green bank are to capitalize the segments of the market that are under invested." Ms. Kanika Chawla, Director, CEEW-CEF, added “a combination of ring-fenced public finance and lower risk private capital,” available through a green window, “can spur livelihoods and create climate action opportunities.”

Renewable energy in India has seen an incredible growth in the last decade. However, as Dr. Arunabha Ghosh, CEO, CEEW, emphasized, “India has to go even faster in the next decade. CEEW-CEF, NRDC, and partners are trying to catalyze efforts to transform developing economies to create a sustainable future.”

NRDC president Ms. Gina McCarthy’s remarks sum up the discussion well, “India is one of the top nations worldwide in clean energy deployment and is critical to the global fight against climate change. I am sure the Green Window would inspire many other similar institutional mechanisms not just in India, but also globally.” Ms. McCarthy also reminded the audience: “As we plan our recovery from COVID-19, we must act boldly on climate. It is not an either–or: urgent climate action will save lives and boost the economy.” 

In case you missed the discussion, a recording is available here.

This online discussion is the second of our series on Green Finance in India. You can read more about the first webinar on financing electric mobility here and follow our upcoming discussions here. 

Poonam Sandhu leads NRDC's finance work and is based as a consultant in New Delhi.

Madhura Joshi leads NRDC's energy access and climate policy work based as a consultant in New Delhi.