From banks to capital markets: alternative investment funds as a potential pathway for refinancing clean energy debt in India

Clean energy must play a central role in achieving India’s green growth goals. The IFC estimates India will need $450 billion to finance its 2030 clean energy targets (IFC 2017). Assuming a typical 70-30 split of financing via debt vs equity, the debt funding requirements translate to $315 billion through 2030. While India’s clean energy sector continues to grow and attract significant investment, there can be serious challenges to the growth trajectory, if the capital deployed in existing projects is not recycled and if new sources of capital are not included to meet the increased future investment requirements (Pragathi and Veena, 2018). It is, therefore, imperative that operational renewable energy projects access capital markets to recycle capital and attract new investor classes. This study, produced by Climate Policy Initiative under the US-India Catalytic Solar Finance Program (USICSF), and as a knowledge partner with the Indian Renewable Energy Development Agency (IREDA), looks at various avenues for renewable energy to access capital markets.