AIIB expects $100 million annual investment in India’s renewables sector

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The Asian Infrastructure Investment Bank (AIIB)—which has so far invested almost US$ 3 billion in varied sectors in India—expects private investment worth US$ 100 million a year in solar and wind projects of the nation next month onwards.

News agency PTI quoted the bank’s Director General (Investment Operations) Pang Yee Ean as saying: “We should be consistently doing wind and solar projects up to US$ 100 million each year… I would say each year there would be a USD 100 million in the private sector for renewable projects [in India].”

Pang was speaking after addressing the South Asian Diaspora Convention in Singapore held during November 15-17.

The announcement follows AIIB’s last-month approval to extend a US$75 million loan to Tata Cleantech Capital Limited. The Beijing-headquartered bank has so far invested in 13 projects in India spanning transport, energy, water and finance sectors. The Tata Cleantech Sustainable Infrastructure On-Lending Facility project aims to increase private capital investment in renewable energy, power transmission and water infrastructure.

The scale of opportunity: US$500-700 billion

Private investment assumes importance for India to build resilience in infrastructure development.

India will require an investment worth US$500-700 billion in renewable energy and associated grid integration and expansion over the coming decade in order to meet its renewable energy targets,” stated an Institute for Energy Economics and Financial Analysis (IEEFA) report in August this year.

The huge investment opportunity arises as the country’s Central Electricity Authority is now targeting an ambitious renewable energy target of 523 GW by 2030—the report noted, adding that India is set to reach 144 GW of renewable energy by the end of financial year 2021/22.

The report highlighted that the government is paving the way for increased investment by putting in the right policy framework with announcements like payment security mechanism enhancements and removing the priority lending limit.

Author Tim Buckley, Director of Energy Finance Studies at IEEFA said: “The world is looking to invest in India’s renewable energy sector…..The country has a clear ambition to transition to a cheaper lower emission electricity system, and that ambition is attracting healthy global investment.”

However, “Global capital flows will into India will accelerate as long as the Indian government provides a clear policy framework and puts in place measures to lower risks and protect investor confidence,” Buckley stated.