Funding for renewable energy projects in India surged by 63% in 2023 compared to the previous year, reaching approximately Rs 30,255 crore ($3,663 million). This boost in investment highlights a growing focus on clean energy, as reported by the Centre for Financial Accountability.
According to the report titled ‘Coal vs RE Investment in 2024’, financing for coal power projects has seen a decline. Despite this reduction, corporate finance lending to coal power and mining companies still totalled $3 billion in 2023.
Meanwhile, in 2023, solar power projects emerged as the leading sector in renewable energy deals, accounting for 49% of total investments. Hybrid projects followed closely, making up 46% of the deals, while wind energy accounted for 6%.
Majority of Coal-linked Financing from Underwriting
In the same year, commercial banks in India facilitated over 96% of financing for coal-linked companies through underwriting, with loans constituting the remaining 4%. US-based banks were the dominant players, providing 65% of the corporate financing for coal-linked companies.
Renewable Energy Investments and Financing Trends in 2023
For the third consecutive year, all project finance loans in 2023 supported renewable energy, financing 8.77 GW of capacity. India achieved 188 GW of non-fossil fuel capacity in 2023 but remains off-track to meet its 500 GW target by 2030.
Primary financing played a dominant role, accounting for 77% of project deals, while refinancing made up the remaining 23%. Solar power led the sector, comprising 49% of the total deals, followed by hybrid projects at 46% and wind energy at 6%.
Commercial banks contributed 68% of renewable energy loans, amounting to Rs 20,625 crore ($2,497 million). Regionally, Gujarat received 25% of the financed capacity, totalling Rs 9,857 crore ($1,193 million), with Karnataka following at Rs 4,593 crore ($556 million).
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