IREDA finances Rs 10,000 crore green projects during 2016-17

The Indian Renewable Energy Development Agency increased its financing of green energy projects considerably in 2016-17, crossing the milestone of Rs 10,000 crore in a single year for the first time.

IREDA provided loans of Rs 10,200 crore through 2016-17 for 112 clean energy projects across solar, wind, small hydro and biogas. “In the coming year, we plan to do Rs 12,500-13,000 crore,” said KS Popli, chairman and managing director.

It nearly doubled its support for solar projects to Rs 4785.87 crore in 2016-17 from Rs 2684.68 crore in 2015-16, but its financing of wind projects dropped slightly to Rs 2511.69 crore from Rs 2735.51crore.

The company, currently an NBFC under the Ministry of New and Renewable Energy, with mini navratna status, also hopes to come out with an initial public offering later this year for which cabinet approval has been sought.

“We plan to sell around 13 crore shares divesting 15% of our stake,” said Popli. The share price and amount to be raised have not yet been decided, but Popli expected shares to sell at a premium of Rs 40-50 a share following the listing.

IREDA has also initiated the process of converting from an NBFC to a green bank. “In effect, we are already a green bank, but some more formalities have to be gone through before our name can be changed appropriately,” he said. “We are working on the process.”

The falling tariffs of solar and wind power, thanks to the auction process initiated by the government, may please discoms and consumers, but financiers of renewable energy projects such as IREDA may have reasons to worry as their borrowers’ margins get squeezed.

“Some people do feel that project viability may be affected by the dropping tariffs,” said Popli. “But I expect developers to take due care and get the right price for their power. My discussions with them suggest they have factored in everything. Besides, the advantage with low tariffs is that electricity boards will be more inclined to sign contracts for renewable energy which gives financiers like us comfort that repayments will be made.”

Is it possible to make financing for renewable energy cheaper? “At present, loans are being provided at 10-10.5% by most banks and financial institutions,” said Popli, adding, “We have to come up with innovative solutions if we want to lower them further.”

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