Global experience (e.g. in solar PV and on-shore wind) has shown that targeted public interventions can support increased flows of finance to renewable energy projects (Steffen, Egli & Schmidt, 2020).
For example, risk mitigation (e.g. the IREDA credit enhancement scheme) and financial tools such as the Ministry of Finance's Partial Credit Guarantee Scheme can help to enable flows of private capital to renewable energy projects.
A number of potential financing vehicles can build upon these initiatives, helping to catalyse the scale needed to finance India’s 2030 ambitions.
One such example is structured finance (e.g. via aggregation partnerships) to increase investment volumes and reduce due diligence costs, for instance for smaller-scale and distributed renewable energy projects.
Standardisation (e.g. of project documents) can also be used to prepare projects to be pooled as securitised assets for trading in capital markets (IRENA, 2016).
Other financial instruments such as green bond issuance, which has ramped up in India in recent years, can help scale up and recycle capital for renewable energy projects, particularly for more established, utility-scale renewable electricity developments. This could be done, for instance, through a limited-period, subsidised credit enhancement facility to support opening up India’s domestic bond market, which has seen very limited renewable energy bond issuances (CEEW, 2020).
These instruments can also expand the current investor base, for instance tapping into international institutional investors such as insurance and pension funds (CEEW-CBI, 2019).