200 million euroes funding from EU for Indian RE projects

Posted on September 1, 2011 by

In a development that will define the direction of climate change related negotiations and finance, India will be receiving a loan of €200 million from the European Union. This tranche will be used to finance private sector projects for the development of renewable energy resources. This is result of EU’s “strategic partnership” with India. This will flow through from the European Investment Bank (EIB) to ICICI Bank, India’s largest private bank. This is the first time these banks are working together.

By providing long-term financing to renewable energy projects across solar photovoltaic, biomass and onshore wind power being developed by private companies, this financing will support India’s efforts to reduce greenhouse gas emissions. The loan is part of EIB’s Energy Sustainability and Security of Supply Facility (ESF). It is a €4.5 billion programme towards EIB’s goal of promoting renewable energy and energy efficiency in non-EU countries.

The projects to become eligible for financing in this mechanism should bring economic benefits by promoting renewable energy, reducing energy costs and reducing GHGs and other pollutants. The lenders will ensure that the projects are economically and financially viable, technically adequate and comply with the bank’s environmental and social requirements.

Loans under this program do not need credit guarantees from the EU as the recipients are investment-grade countries. EIB also has a mandate for lending outside the EU bloc under its cooperation with various countries. EIB has undertaken four successive lending operations for Asia and Latin America, while this is the first time EIB’s ESF program involving India.