Lending to renewable energy projects in India in 2023 was 63% higher than in 2022, reaching a total of INR 30,255 crore ($3,663 million). On the other hand, for a third consecutive year, there was no project finance lending to coal power projects, says the seventh annual Coal vs Renewables Investment report by The Centre for Financial Accountability (CFA).
Solar lending, at INR 14,814 crore ($1,793 million), accounted for 49% of renewable energy funding in 2023, very close to the 46% of funding going into hybrid projects. Funding for hybrid projects increased 31% year-on-year increase, rising to INR 13,773 crore (USD 1,667 million). Only one loan financed a wind energy project.
The total RE project capacity funded by loans was around 8.8 GW (including 4.75 GW of solar).
The CFA report, which traditionally looked at project finance lending to coal, solar, and wind, increased its scope of analysis this year to include corporate finance lending to companies engaged in coal power and mining.
“Over the last seven years, we’ve consistently seen an increase in project finance to solar and wind power projects. This shows there is investor confidence in renewable power projects. However, since we expanded the scope of this report this year to include corporate finance, we note a significant lending coming in from the US to companies engaged in coal power expansion in India,” said Joe Athialy, Executive Director, Centre for Financial Accountability.
While the report shows a decline in project finance for coal power projects, the data gathered showed over $3 billion in corporate finance lending to coal power projects. Most of this lending was in the form of underwriting services provided by US based financial institution, Jefferies Financial Group, to Adani and JSW Energy.
Jefferies Financial Group, a US based financial institution, provided more than $2 billion in underwriting services to JSW Energy and Adani in 2023. It’s the only US based financial institute to provide corporate finance to coal lined companies in India.
“While Western countries have been dilly dallying on increasing climate finance for the developing world, its private sector seems to be lending to companies currently engaged in coal power expansion,” added Athialy.
Besides US based Jefferies, Indian commercial banks such as State Bank of India, Kotak Mahindra Bank, ICICI Bank, and Axis Bank collectively provided US$752 million in loans and underwriting services to companies with active coal expansion plans.
For renewable energy projects, Union Bank of India was the largest project finance lender though India based foreign banks provided over $1.5 billion in project finance.
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