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Photo: UK Aid

The loan has been granted under an agreement signed today by the ADB and the Indian government and is the first payment of a multi-tranche loan worth $500m in total.

By increasing the lending power of the Indian Renewable Energy  Development Agency (IREDA) to eligible sub-projects in India, the loan programme aims to use public sector resources to catalyse private sector investments in wind, biomass, hydropower, solar and cogeneration technologies.

M Teresa Kho, the ADB’s country director in India, said: “ADB’s loan will help the government scale up renewable energy infrastructure by facilitating investments in projects balancing the objectives of growth, climate change and security.

“ADB funds can be used to finance up to 50% of the sub-project cost, and the first tranche loan will help the IREDA finance around 10 or more renewable energy projects.”

The programme is expected to leverage approximately $300m in equity and other investments from sub-project sponsors and at least $200m of additional debt funds from unrestricted sources. This amounts to a total investment of around £1bn.

The IREDA is a government-owned, non-bank financial institution that aims to promote renewable energy investment under the administrative oversight of India’s Ministry of New and Renewable Energy.

Shri S Selvakumar, joint secretary for bilateral cooperation at the Ministry of Finance’s Department of Economic Affairs signed the agreement on behalf of the Indian government. He said the loan programme would meet one of the “major challenges” to India’s renewable energy deployment.