Tag: Renewable

Renewable Energy: Can India Realize Its Unlimited Potential?

Driven by it increasing appetite for energy to fuel its economic engine, an over dependence on fossil fuels, increasing pollution levels across its major cities and a rising fuel import bill, India’s need to adopt and propagate the use renewable sources is more pressing than most.

To its credit, India has already made rapid strides towards achieving its core objectives in the renewable energy development domain. As a result of the concerted efforts put in by the central government and its Union Ministry of New and Renewable Energy in tandem with several state bodies and NGOs, India today is a leading global player in terms of its total installed wind power capacity and decentralized solar energy projects.

Solar energy is fast becoming the preferred option in the generation segment across a large number of states, driven largely by the ample sunlight across most parts of the country and multiple government incentives like tax holidays and capital subsidies.

Key factors like rapid improvements in technology, entry of fully integrated players and the sheer economics of scale have all combined to reduce capital costs of solar energy projects significantly in recent years. With this, several renewable energy projects including solar are expected to achieve grid parity as early as next year, when compared with costly to fuels such as LNG and imported coal.

According to the global clean energy communications and consulting firm, Mercom Capital, Indian solar installations are forecasted to be approximately 2,200 megawatt (MW) by the end of this year while its wind energy market is expected to attract investments totalling INR 1,00,000 crore ($15.7 bn) by the year 2020 while wind power capacity in the country is expected to almost double from over 23,000 MW in June 2015, with an estimated capacity augmentation of around 4,000 MW p.a over the next five years.

Realising its vast potential, the new Indian government has also announced a slew of big ticket programmes aimed at providing a new impetus to the Indian renewable energy development story. A list headlined by the announcement of a massive renewable energy power production target of 175,000 MW by 2022 (100,000 MW-solar, 60,000 MW-wind, 10,000 MW-biomass, 5,000 MW-small hydro power projects).

Other key initiatives include: announcing the National Wind Energy policy, approval for 15,000 MW of grid-connected solar power projects by the NTPC and the inclusion of the renewable energy under priority sector lending (PSL) by the RBI which has paved the way for banks to provide loans upto US$ 2.36 mn to borrowers for renewable energy projects.

Clearly, if things go as planned, India looks well set to occupy its rightful place as a leading producer of clean energy and a shining example for the rest of the world to follow.

Welspun Renewables is one of India’s leading players in the clean energy domain and is committed to establishing mega renewable energy projects in the country.

Profound Capital Markets for Renewable Energy – Eco-Plant Corporation

Investing in Renewable and Efficiency Energy is on the verge across the world. Individuals are becoming more sensible towards their environment, which resulted in more businesses adopting environmentally friendly business practices and becoming a sustainable green business. Converting into green business has been a wakeup call for many companies and for some companies it was already a mentioned market trend which was recognized by them quite early.

Following the global financial crisis, a more varied funding market is emerging in many countries. Established investors are assisting in filling the funding gap missed by the shrinkage in bank lending in the rouse of the crisis, particularly in long-term financing for infrastructure projects, and sitting alongside banks to offer a wider pool of capital to developers.

The economic climate overcoming the financial crisis of increased regulatory supervision and persistently low rate of interest led to pension funds and insurance companies in seeking an alternative source for a long-term stable investment.

Abundant number of pieces of evidence shows that renewable energy and energy efficiency are booming sectors for business. According to a report, 190 of the fortune 500 companies together saved around 3.7 billion dollars through their energy efficiency initiatives and collective renewable energy.

With the growing streak of this trend around the world, there is an increase in debt finance in the market from established investors mostly for an infrastructure project and more conventional renewable energy assets including solar PV, onshore wind and Bioenergy. Established investors that are on a quest to match long-term investments, index-linked liabilities and higher secure returns as compared to currently available bonds, are attracted by stable, long-term and index-linked type of assets.

A considerable amount of investment has been made in operating assets through which increasing capacity of risk has been taken by the investors. However, similar to banks, there seems to be a very little appetite for development risk factors. Established investors are moving faster towards banking counterparts in being able to provide reimbursement profiles and staged drawdown facilities that are suitable for this kind of financial markets.

Investments from non-bank institutions have often been through the purchase of participation in the secondary debt trading market or bond markets. However, a market of debt facilitates private placement (PP) which is a small group of sophisticated investors has been slowly developing.

Private placement market will entirely substitute other forms of finances for renewable projects. There are already long-established private placement market groups in many countries for corporate debt. Since the financial crisis, smaller national markets have also developed. To help encourage the development of private placement market, loan market association published a suite of standardizing the documentation for private placements across many countries for providing a proper framework. It is hoped that these suit will help to raise confidence in the market and will encourage investment by reducing the time and costs often associated with current private placements in certain countries.

Certain efforts are taken to simplify and make the process more transparent by turning towards more private placements. Governments across various countries have announced a tax exemption for private placements, this will help in encouraging both borrowers and institutional investors to invest in the capital market.

Many countries now support the growth of renewable energy sector and help in encouraging to further invest in energy infrastructure, renewable power and fossil fuels. Attracting cross-border investment and minimizing dependency on traditional bank debt, will further encourage institutional investment for key sector helping to stimulate growth and aid resilience in various economies.

Banks are also returning to the market which showed a substantial increase in long-term debt facilities offered by banks for renewable energy projects. In addition, many banking facilities are likely to preserve a significant role together with established investors by providing them ancillary facilities and deposit services. This includes catering to letters from credit facilities and working capital which non-banking investors are not able to provide the investors with. Likewise, the role of the bank is to provide trustee and agency with services in case the funds are ill-equipped.

Predictable sustained growth in Institutional Investment, alongside returning bank debt and other innovative funding structures, is creating a deeper impact on the capital market for renewable energy projects. Investors looking to invest in green business are coming across greater opportunities from future perspectives which is just a matter of time. Clean energy is just the tip of the iceberg. A recent study shows that companies could earn around 12 trillion dollars by 2030 in business revenue and saving by adopting sustainable, low-carbon business models. Investors all over the world are taking a note, as green bonds are increasingly seen as smart investments.

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