The Indian Renewable Energy Development Agency (IREDA) has been proactively developing innovative financing schemes and policies to develop solar projects in the country and as of today it contributes more than 12 per cent to the total installed power capacity of India, says K S Popli, Chairman & Managing Director, IREDA, in an interview with Gautam Debroy of Elets News Network (ENN)
What role does IREDA play in the energy sector?
IREDA was established in 1987 as a specialised public financial institution under the administrative control of the Ministry of New and Renewable Energy (MNRE), with an objective to promote, develop and extend financial support to renewable energy and energy efficiency, and conservation projects in the country. IREDA has been notified as a ‘Public Financial Institution’ and registered as a Non-Banking Financial Company (NFBC) with the Reserve Bank of India.
The Agency has played a pioneering role in the promotion and development of renewable energy in India. It has acted as a vital bridge in commercialisation of the sector by providing innovative and customised financial instruments across the value chain of the Cleantech sector. With the business models developed by IREDA becoming successful, the financial institutions and banks are coming forward to finance the sector.
Till the end of the financial year 2013-14, the agency had sanctioned more than 2,100 clean energy projects with a loan commitment of `26,278 crore, making it the largest ‘green financier’ in the country. This has supported the growth of renewable energy sector, which currently contributes more than 12 per cent to the total installed power capacity of India.
IREDA has been the focal point of attracting international finance in the Indian renewable energy sector, i.e. multilateral/ bilateral lending agencies like World Bank, Asian Development Bank, JICA, KFW, AFD and EIB, preferring to route their funds through IREDA for supporting the Indian cleantech sector.
What initiatives are being taken to make the renewable / solar energy user-friendly?
Apart from offering term loans at competitive terms, IREDA is also involved in various promotional and developmental activities. It provides concessional finance to projects located in Jammu & Kashmir, north-eastern states (including Sikkim), tribal / hilly areas, islands and deserts. It encourages entrepreneurs hailing from certain segments of the society, viz. SC / ST, ex-servicemen, physically handicapped and women, for setting up the projects.
Besides fulfilling its role as a financial institution, IREDA has been acting as a thought leader. It is proactively disseminating information to stakeholders on various facets of the renewable technologies through awareness programmes, best practices manuals, compendiums and a trade journal (Energy Next).
IREDA has a comprehensive policy on Corporate Social Responsibility (CSR) and Sustainable Development, which aims to enhance value creation in society through community development, education and healthcare through use of solar/renewable energy. With a view to have intensive approach towards CSR, IREDA has a dedicated unit to undertake various CSR programmes and a committee of directors to oversee the activities.
What are the benefits of International Finance Corporation (IFC) joining hands with IREDA to provide infrastructure financing projects in India?
IFC, a member of the World Bank group, and IREDA have partnered to provide the muchneeded infrastructure financing for renewable energy projects in the country, which, in turn, will help boost growth in renewable energy capacity additions and also create entrepreneurial opportunities and jobs. This collaboration will help standardise steps that lenders take while co-financing projects with IFC. This will also help bring global best practices and standards in the Indian market. IFC can also help us in augmenting our net-worth and raising long-term debt from offshore.
Till the end of the financial year 2013-14, the agency had sanctioned more than 2,100 clean energy projects with a loan commitment of `26,278 crore, making it the largest ‘green financier’ in the country
How does IREDA plan to encourage the commercial market to take up green projects?
IREDA is a specialised public finance institution for providing financial support to renewable energy and energy efficiency, and conservation projects in very competitive market terms. IREDA comes out with new and updated policies from time-to-time in line with the market requirements and in keeping with the market trends. It provides term loan financing at highly competitive terms with longer repayment periods and higher debtequity ratio for renewable energy projects to attract investments in the renewable energy sector. IREDA has been awarded ‘Mini Ratna’ (Category-I) status by the Ministry of New and Renewable Energy in 2015.
What are your strategies to support rooftop solar mission of the Government of India?
IREDA has recently developed a new policy for providing terms loans for all grid connected/interactive Solar PV projects located on rooftops. To avail the benefits of the scheme, applications can be submitted under aggregator category and direct category. In the aggregator category, the application can include either single project or aggregate multiple projects, while in the direct category, application can include projects from single roof owners only.
There is flexibility with respect to revenue models of projects, which can be either on captive consumption basis, or sale to grid under net metering and gross metering and also other revenue models. This will facilitate financing reach out to more such projects. Interest rates offered for the rooftop projects are 150 to 200 points lower than grid connected solar projects.