A new report has revealed that renewable energy projects took up a vast majority, nearly 80 percent, of the total energy financing in 2018

A new report has revealed that renewable energy projects took up a vast majority, nearly 80 percent, of the total energy financing in India last year, while financing for coal-fired power plants decreased by a staggering 90 percent.

According to the report “Coal versus Renewables Finance Analysis” by the Centre for Financial Accountability, a Delhi-based think tank, lending to coal-fired power plants in India slumped 90 percent to Rs 6,081 crore in 2018 as against 2017, while the funding for renewable energy projects grew by Rs 1,529 crore to Rs 24,442 crore.

The report further revealed that most coal-fired project loans came from majority state-owned financial institutions while majority private banks contributed three-quarters of all the finance towards renewable energy projects.

The analysis examines 52 project finance deals comprising a loan component across 54 coal-fired power and renewable energy projects with a financial closure date between January and December 2018.

The 54 energy projects attracted total lending of Rs 30,524 crore, 80 percent of which is attributed to renewable energy projects while the rest went to coal-fired power plants. In 2018, only 5 coal-fired power plants with a combined capacity of 3.8 GW received finance totalling Rs 6,081 crore. By contrast, in 2017, 12 coal-fired projects with 17 GW capacity received Rs 60,767 crore finance.

“In 2018, a total of 49 renewable energy projects with a combined capacity of 4.7 GW obtained loans of Rs 24,442 crore. Solar PV attracted 60 percent of this finance while the remaining 40 percent went to wind energy projects,” the report states.

A few Indian states paved the way for the growth of the renewable energy generation capacity in 2018. Projects in Karnataka, Madhya Pradesh and Gujarat attracted half of the entire country’s project finance for renewables across 23 solar PV and wind projects. Meanwhile, Chhattisgarh and West Bengal together attracted finance for three coal-fired power projects but no renewables. 

The article, first published on Saur Energy International, can be accessed here.