After a US$75 million loan to Tata Cleantech Capital, the Beijing-headquartered Asian Infrastructure Investment Bank (AIIB) has agreed to invest US$65 million in a 250 MW grid-connected solar power project by another Indian developer Hero Future Energies.
The project—located in Jodhpur district of Rajasthan—is being developed by Hero Future Energies’ special purpose vehicle Clean Solar Power (Jodhpur). Located approximately 10 km south of the Bhadla Solar Park, it is spread across three villages, namely, Dedasari, Khakori and Durjani, and will result in clean energy generation of 616 MWh in 2022.
The AIIB has so far invested almost US$ 3 billion in varied sectors in India, and recently announced intentions of investments worth US$ 100 million a year in the nation’s private sector for solar and wind projects.
“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]”—news agency PTI quoted the bank’s Director General (Investment Operations) Pang Yee Ean as saying after addressing the South Asian Diaspora Convention in Singapore held during November 15-17.
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.