India’s Clean Energy effort gets a USD 20mn boost from OPIC

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USICEF (US-India Clean Energy Finance Initiative), a joint initiative of several US based foundations (the Anchor Funders), the Overseas Private Investment Corporation (OPIC) and the Government Of India, has been launched with a USD 20-million financing facility. This will help in financing OPIC and contributing to India’s ambitious renewable energy and energy access goals.

This joint initiative between India and U.S. was set up to increase clean energy access in India for catalyzing investment in distributed renewable energy projects, including roof-top and off-grid. It was jointly launched by New and Renewable Energy Minister Piyush Goyal and US ambassador to India Richard Verma.

Letter of intent were signed and exchanged between MNRE and OPIC for the creation of a USD 20 mn for USICEF initiative. The initiative equally supported by the US and India would support projects which, upon long-term financing and deployment would qualify for the support of long-term debt financing from OPIC.

OPIC is US government’s development finance institution. It mobilises private capital to help address critical development challenges and in doing so, advances US foreign policy and national priorities.

The aforesaid, USD 20 mn would be granted to only those companies that are found to be eligible through a pre-determined set of parameters. It would assist ready-to-scale companies to obtain long-term debt financing from OPIC, other development finance institutions, as well as the private sectors. This in return would fund the project preparation activities of the eligible companies.

The initiative aims to unlock OPIC financing and mobilize public and private capital to expand access to distribute clean energy solutions that will benefit disadvantaged communities in India’s ambitious renewable energy and energy access goals.

This will be mainly beneficial to the project developers pursuing mini-grid, distributed roof-top and off-grid solar projects, as well as smaller-scale grid connected solar projects. Early-stage project capital gap for distributed solar would also be supported by the USICEF initiative.

Based on a report, Mr. Udai Khemka presented to Mr. Goyal, the Clean Energy Finance Forum (CEFF) report has made recommendations which will help solicit greater investment into the renewable energy sector. The report has been prepared after an extensive domestic and international consultation with all categories of financial institutions (including pension funds, sovereign investors, insurance companies, other financial investors/ funds, banks, investment banks, etc.) multilateral institutions along with strategic investors and developers. Other key cross cutting recommendations include boosting and accelerating “Open Access” Markets; Improve PPA Bankability, Improve Ease of Access to Domestic Banking and Capital Markets; Encourage International Debt and Equity Investments and Mitigate Currency Risk.

Climate Policy Initiative (CPI) has been engaged by the Anchor Funders to administer the program over an implementation period of 4 years. It works to improve the most important energy and land use policies around the world, with a particular focus on finance. CPI supports decision makers through in-depth analysis on what works and what does not. CPI works in places that provide the most potential for policy impact. It is a small but dynamic organization, with a global reach and an entrepreneurial culture. In India, CPI works in close collaboration with the Indian School of Business (ISB) as well as the Indian Council for Research on International Economic Relations (ICRIER).