Indian renewable energy developers raised $3.6 bn via green bonds in Jan-Jun

The study, supported by Bloomberg Philanthropies, also found that Indian developers have raised more than ₹78,200 crore ($11 billion) since 2014 through green bonds issued in international markets. Two of them, Greenko and ReNew Power, account for nearly 70% of all issuances by value. The findings highlight the potential of green bond markets to support India’s ambitious push to achieve energy independence by 2047, a target recently announced by Prime Minister Narendra Modi.

Proceeds from the ₹78,200 crore of capital raised have directly refinanced debt for over 10 GW’s worth of Indian renewable energy (RE) projects, the report said. Wind and solar power account for 42% each of this refinanced portfolio and represent a combined 8.4 GW. Hydropower makes up the balance. This implies that 8.4% of India’s non-hydro RE capacity, totalling 100 GW, has been debt-financed with overseas capital.

Gagan Sidhu, director, CEEW-CEF, said, “India’s non-hydro RE portfolio recently crossed the 100 GW mark, but we need to significantly ramp up capital mobilisation to get to 450 GW by 2030. Additional routes of capital such as green bonds will be essential for this transition, which requires investments of more than Rs15 lakh crore in power generation capacity alone. For perspective, the outstanding exposure of Indian institutional lenders to the entire power sector stood at approximately Rs13 lakh crore as of March 2020.”

According to the report, bonds issued by Indian developers have generated high market interest, with average oversubscription at 360%. Asian investors have shown the greatest appetite by picking up nearly 50% of the bonds. However, the market remains nascent. Only eight Indian developers have accessed international bond markets as of June 2021.

Shreyas Garg, consultant, CEEW-CEF, said, “So far, international green bonds have been primarily raised by India’s established utility-scale developers. Going forward, we hope to see more developers leveraging their strong financial credentials to unlock much-needed capital through this route. Smaller players without gigawatt-scale capacities should also seriously evaluate green bonds. Further, it is interesting to note that projects with state utilities make up over 60 per cent of bond portfolios, with developers mitigating payment delay risks by diversifying their portfolios. Other firms planning bond raises should similarly structure projects into portfolios that can diversify risk and attract investor interest.”