Another public sector enterprise has entered India’s renewable energy financing landscape at a time when mobilizing funds for the sector is considered key to installing 500 GW of non-fossil fuel-based energy capacity by 2030.

Government-owned Indian Railway Finance Corporation (IRFC), the dedicated funding arm of the Indian Railways since 1986, is now expanding into sectors with forward and backward linkages to railways, such as power generation and transmission.

IRFC recently won a bid to extend a rupee term loan of ₹75 billion (~$861 million) to NTPC Green Energy. The finance corporation is actively exploring opportunities to fund the renewable energy needs of the Indian Railways and metro rail projects. It is also lending ₹31 billion (~$35.58 million) to a thermal power generation subsidiary of NTPC.

The public sector lender has now been bestowed ‘Navratna’ status, allowing it more operational and financial autonomy.

IRFC has also partnered with REMC to finance renewable energy projects awarded by the latter to supply power to the railways.

Besides Indian and foreign commercial banks, government-owned agencies, Power Finance Corporation, REC Limited, and Indian Renewable Energy Development Agency, actively lend to the renewable energy sector.

IRFC’s renewable energy financing push comes weeks after the Minister of New and Renewable Energy, Pralhad Joshi, emphasized the importance of mobilizing finance to meet India’s clean energy target at a workshop. Estimates have put the size of debt required to install 500 GW of renewable energy capacity by 2030 at up to ₹30 trillion (~$365 billion).

Joshi also called for the introduction of a renewable energy financing obligation for banks and financial institutions. Parliament’s standing committee on energy made a similar recommendation in 2023, proposing that lenders invest a specific percentage of their financing commitments in the Indian renewable energy sector.

Describing the existing financing gap as ‘gargantuan,’ the committee suggested MNRE should work to make available innovative financing mechanisms like infrastructure development funds, infrastructure investment trusts, green/masala bonds, and crowdfunding for the renewable energy sector.