Wednesday, December 11, 2024
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Scaling renewable energy to 500 GW by 2030: Innovative financing strategies needed

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Shillong, September 3: The Central government’s ambitious target of increasing its renewable energy capacity to 500 Gigawatt (GW) by 2030 demands a substantial investment of Rs 17 lakh crore for long-term commitments.

To achieve this, the government is considering various financing options, including green masala bonds and infrastructure investment trusts (InVITs).

As per IANS, however, meeting this goal also involves covering transmission costs, requiring an annual investment of Rs 1.5-2 lakh crore in the renewable energy sector. Unfortunately, the actual investment in recent years has been in the range of Rs 75,000 crore, highlighting a significant funding gap.

To bridge this substantial financing gap and reduce the cost of financing for renewable energy developers, the Ministry of Renewable Energy is actively exploring innovative financing mechanisms. These may include infrastructure development funds (IDFs), alternate investment funds, green masala bonds, InVITs, and even crowd funding for the renewable energy sector.

Additionally, the ministry is contemplating the introduction of a renewable finance obligation, similar to the renewable purchase obligation for banks and financial institutions. This would mandate them to allocate a specific percentage of their investments to the renewable energy sector.

Recognizing the success of green banks in promoting clean energy financing worldwide, the government is also considering the establishment of a green bank system to address the persistent financing challenges faced by the renewable energy sector in the country.

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