Clean Energy Finance

Accelerating the pace of clean energy deployment in the country requires a supportive financial infrastructure. Clean energy finance focuses efforts on directing funds into clean energy projects.

India aims to have 175 GW of renewable powered energy by 2022 and 450GW by 2030. These targets will require the setting up of massive infrastructure and upgrading current infrastructure, both of which are financially intensive tasks. India has also made commitments to reducing its energy intensity and lowering its carbon emission footprint in line with the Paris Agreement. If the country is to achieve 175GW by 2022, we require a total investment of approximately US$150-200 billion. Reaching 450GW will require a far greater sum of money. The Economic Survey 2019 estimates that we will require investments to the tune of $250 billion during 2023-30. At present, while investment in clean energy is growing, the inflow of clean energy funds stands at approximately ~$14 bn per (3 year average) year as opposed to the required ~$35 billion per year for the next 10 years.

The concept behind clean energy finance is a relatively new one and this gives rise to several institutional hurdles. At present, there exists no universal definition of what constitutes green finance. Arriving at a definition of green finance in the Indian context is necessary because it helps align priorities and formulate common end-goals. Additionally, low levels of awareness around climate risk and green finance lead to investors being underequipped to appreciate the nuances of such risk and financing in this space. Clean energy enterprises face a higher incubation period and the return on investments can often take time to reflect. This gives rise to an inflated sense of investment risk and such a perception discourages private investors from financing clean energy projects.

The energy sector in India is a major contributor to the carbon emissions which are responsible for climate change. Transitioning to a clean energy infrastructure can help mitigate climate change. Finance is a crucial element of such a transition. Not only does greater investment in clean energy ensure a faster rate of adoption for the infrastructure, it also contributes to the creation of greater employment opportunities in the country.

Clean energy investment in India is only a fraction of the total clean energy investment globally. China invested $83.4 billion in clean energy in 2019, the highest investment globally, with the United States of America following at $55.5 billion. While investment in clean energy is growing in India, the scale of investment does not yet match the capital infusion needed to achieve India’s clean targets. Public funding alone is insufficient and private investment has so far been limited. While strong and effectively implemented policies can grow clean energy in India, financing solutions are critical to making these policies work. Shakti Sustainable Energy Foundation works to enhance the investment required for meeting India’s clean energy targets as well as to find solutions for catalysing clean investment instruments.

India has set ambitious Nationally Determined Contribution (NDC) targets that it needs to meet by 2030. Reducing emissions by…
Know more

Businesses are crucial stakeholders in the fight against climate change. Over a quarter of India’s emissions are directly caused…
Know more

India requires massive investments in clean energy projects to reach the ambitious Nationally Determined Contribution (NDC)…
Know more

It is estimated that over a quarter of India’s emissions are directly caused by the commercial and industrial sectors, thereby…
Know more