In 2021, 100% of the financing for new energy projects in India went to the renewables sector. This is a considerable increase compared to 2020, when renewable energy loans accounted for 74%, according to the fifth edition of Coal vs Renewable Financial Analysis by Climate Trends and Centre for Financial Accountability (CFA).
A total of INR 33,893 crore (USD 4,598 million/$6,832 million) flowed to renewable energy projects, all of which were solar and wind. The total capacity across all projects identified was 8.5 GW. Like in 2020, solar power dominated with a 83% share of renewables financing deals. Wind’s share stood at 17%.
L&T Finance replaced State Bank of India (SBI) as the biggest financier for renewable energy projects in 2021.
“The total funding for new energy projects in 2021 was 60% down from 2017 levels, and no new finance went to coal power projects in the year 2021. Financing for renewable energy projects, on the other hand, recorded a 39% year-on-year increase from 2020,” said the authors.
The study assessed 44 project finance loans across 42 coal and renewable energy ( hydroelectric, geothermal, wave, wind or solar) projects in India that reached a financial closure between January 1, 2021 and December 31, 2021.
“The writing is on the wall. Lending institutions are increasingly moving away from coal lending given the risks. After Federal Bank, the first commercial bank to have announced a coal exit policy, Sarvodaya Small Finance Bank has also announced an end to financing coal projects. This should signal to institutions who have either provided loans or underwriting services, or have shareholdings in coal companies to rethink their lending,” said Joe Athially, Executive Director, Centre for Financial Accountability.
L&T Finance poured INR 4,214 crore into the RE sector in 2021. Rajasthan (INR 22,187 crore) followed by Gujarat (INR 4,025 crore) were the top beneficiaries of renewable energy lending. Collectively, these two states accounted for 77% of all renewable energy loans.
Author: Uma Gupta
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