Raising debt for solar projects in the Indian market

Raising debt for solar projects in the Indian market can be a daunting task. Solar projects require a considerable amount of upfront capital investment, and banks are hesitant to lend without adequate collateral. Moreover, with the volatile nature of the solar industry and uncertainty over government policies and regulations, banks have been reluctant to finance solar projects. However, with the increasing demand for renewable energy and the government’s push for a sustainable future, banks and investors are slowly warming up to the idea of financing solar projects.

The major banks providing debt for solar projects in India are State Bank of India (SBI), Axis Bank, ICICI Bank, IDBI Bank, and Yes Bank. In recent years, international banks such as Standard Chartered, Deutsche Bank, and JP Morgan have also entered the Indian solar financing market.

Let’s take a look at some of the key debt deals announced between January 2021 and December 2021:

1. TCCL – CDC Group: In January 2021, Tata Cleantech Capital Limited (TCCL) raised $30 million from the UK government’s development finance institution, CDC Group. The funds were used to finance the construction of solar projects in India.
2. AGEL – Multiple lenders: In March 2021, Adani Green Energy Limited (AGEL) raised $1.35 billion from multiple lenders, including Standard Chartered Bank, Deutsche Bank, and ING Bank. The funds were used to refinance its existing debt and fund the company’s expansion plans.
3. Fourth Partner – CDC Group: In April 2021, Fourth Partner Energy, a distributed solar energy company, raised Rs. 2.5 billion from CDC Group. The funds were used to finance the development of distributed solar projects in India.
4. Azure Power – MUFG Bank: In July 2021, Azure Power, an independent power producer, raised $163 million from MUFG Bank. The funds were used to finance the construction of solar projects in India.
5. NTPC – REL Bank of India: In September 2021, NTPC Limited, a government-owned power company, raised Rs. 5 billion from REL Bank of India. The funds were used to finance the development of renewable energy projects in India.
6. Vector Green Energy – IREDA: In October 2021, Vector Green Energy, a renewable energy company, raised Rs. 11 billion from Indian Renewable Energy Development Agency (IREDA). The funds were used to refinance the company’s existing debt.
7. KfW – REC: In December 2021, KfW, a German development bank, extended a $169.5 million loan to Rural Electrification Corporation (REC) to finance the construction of solar projects in India.

In conclusion, while raising debt for solar projects in India can be challenging, the increasing demand for renewable energy and the government’s push towards a sustainable future are creating new opportunities for banks and investors. With more international players entering the Indian solar financing market, we can expect to see more debt deals in the future.