India is at a critical juncture in scaling renewable energy to provide energy access to its growing cities and vast rural communities. Financing remains the principal barrier to the rapid expansion of India’s clean energy market needed to meet the ambitious national target of 175 gigawatts (GW) of solar, wind and other renewable energy by 2022. The right policy settings and incentive structures must be adopted to enable renewable energy investment to scale up to needed levels in India.
Innovative financial mechanisms and institutions such as green bonds and green banks, respectively, which have proved successful on the state level and internationally, can help propel India’s solar and wind energy markets and support critical energy-saving efficiency and climate resilience projects. A green bond is a fixed-income financial instrument for raising capital through the debt market, like traditional corporate bonds. The key difference is that green bonds raise funds for projects with environmental benefits, such as renewable energy, low carbon transport or climate adaptation. This report lays out strategies and recommendations to help strengthen and expand the nascent market for green bonds in India.