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Energy Storage Funding Declines Sharply in Q1 2025


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					</table><p>Government-owned lender Indian Renewable Energy Development Agency (<a href="https://www.ireda.in/home" target="_blank" rel="noopener">IREDA</a>) has announced a 27% rise in loan approvals for the financial year (FY) 2025, as per provisional data.</p>
<p>IREDA’s loan approvals stood at ₹474.53 billion (~$5.5 billion) in FY 2025 compared to ₹373.54 billion (~$4.3 billion) in FY 2024.</p>
<p>In the previous year (FY24), the year-over-year <a href="https://www.mercomindia.com/ireda-loan-approvals-disbursements-record-high-fy-2024" target="_blank" rel="noopener">growth</a> in loan approvals was 14.63%.</p>
<p>Its loan disbursement also increased to ₹301.68 billion (~$3.5 billion) from ₹250.89 billion (~$2.9 billion) in FY 2024, rising 20% year-over-year (YoY).</p>
<p>The YoY growth in loan disbursements in the previous year was 15.94%.</p>
<p>The agency’s loan book outstanding stood at ₹762.5 billion (~$8.9 billion), a 28% YoY growth from ₹596.9 billion (~$6.9 billion).</p>
<p>Pradip Kumar Das, Chairman and Managing Director, IREDA, said, “IREDA’s consistent growth in loan sanctions, disbursements, and loan book reflects our strong commitment to financing renewable energy projects. We remain committed to supporting India’s clean energy transition through innovative and accessible financing solutions.”</p>
<p>IREDA <a href="https://www.mercomindia.com/iredas-q3-profits-record-a-27-yoy-increase" target="_blank" rel="noopener">reported</a> a profit after tax of ₹4.25 billion (~$49.52 million) during the third quarter of FY 2025, growing 27% year-over-year. It recorded ₹16.99 billion (~$197.8 million) in revenue from operations, a 35.5% increase over ₹12.53 billion (~$145.9 million) from the same period last year.</p>
<p>As of December 2024, solar sector received largest share of loans disbursed by IREDA at 26%, followed by wind with 18.4%.</p>
<p>Recently, IREDA <a href="https://www.mercomindia.com/ireda-raises-%E2%82%B99-1-billion-through-privately-placed-tier-ii-bonds" target="_blank" rel="noopener">raised</a> ₹9.1 billion (~$106.16 million) by issuing privately placed subordinated Tier II bonds. This financing is for a 10-year tenure at an annual coupon rate of 7.74%. The issuance of Tier-II Bonds aims to tap into the current financial market’s liquidity and support the company’s borrowing plan.</p>
<p>IREDA also <a href="https://www.mercomindia.com/ireda-issues-perpetual-bonds-to-raise-%E2%82%B912-47-billion" target="_blank" rel="noopener">issued</a> its first-ever perpetual bonds worth ₹12.47 billion (~$144.5 million) at an annual coupon rate of 8.4%. By issuing the bonds, IREDA aims to enhance its Tier-I capital, thereby strengthening its financial foundation.</p>
<p>In January this year, the lender <a href="https://www.mercomindia.com/ireda-to-raise-%E2%82%B950-billion-through-qip-for-green-energy-growth" target="_blank" rel="noopener">announced</a> plans to raise ₹50 billion (~$588.24 million) through a qualified institutional placement (QIP) of equity shares. The QIP aims to help meet India’s increasing demand for green energy financing.</p>


IREDA’s FY 2025 Loan Approvals Grow 27% YoY


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					</table><p>Government-owned lender Indian Renewable Energy Development Agency (<a href="https://www.mercomindia.com/ireda-loans-program-rooftop-solar-pm-kusum-consumers" target="_blank" rel="noopener">IREDA</a>) loan approvals surged to ₹310.87 billion (~$3.6 billion) in the third quarter (Q3) of the financial year (FY) 2024-25, a 129% year-over-year increase compared to ₹135.58 billion (~$1.58 billion).</p>
<p>Loan disbursements grew by 41%, reaching ₹172.36 billion (~$2 billion) in 2024, up from ₹122.20 billion (~$1.42 billion) in 2023.</p>
<p>The agency’s loan book outstanding stood at ₹690 billion (~$8.04 billion), a 36% growth over the previous year’s ₹505.8 billion (~$5.89 billion).</p>
<p>The sharp rise in loan approvals and disbursements reflects increased demand for financing renewable energy initiatives in the government and private sector.</p>
<p>IREDA <a href="https://www.mercomindia.com/ireda-reports-performance-cuts-npas-to-1" target="_blank" rel="noopener">reported</a> a profit after tax of ₹3.88 billion (~$46.7 million) during Q2 of FY25, an increase of 36.18% year-over-year.</p>
<p>The company <a href="https://www.mercomindia.com/ireda-loans-program-rooftop-solar-pm-kusum-consumers" target="_blank" rel="noopener">launched</a> its retail division last year. The division will focus on providing loans in the Business-to-Consumer (B2C) sector. The strategic initiative targets borrowers under the PM-KUSUM program, rooftop solar consumers, and other B2C segments. Upon the division’s launch, IREDA approved its first loan amounting to ₹580 million (~$6.95 million) under Component B of the KUSUM program.</p>
<p>IREDA <a href="https://www.mercomindia.com/ireda-loans-program-rooftop-solar-pm-kusum-consumers" target="_blank" rel="noopener">reported</a> a 45.9 % YoY increase in profit after tax for the fourth quarter of FY24 to ₹373.76 million (~$4.4 million) from ₹256.16 million (~$3.07 million).</p>
<p>The company recently <a href="https://www.mercomindia.com/ireda-loans-program-rooftop-solar-pm-kusum-consumers" target="_blank" rel="noopener">invited</a> bids from banks and financial institutions to raise term loans amounting to ¥16 billion(~ $113.3 million) with an additional greenshoe option. The funds will used to lend towards renewable energy, energy efficiency and conservation projects, and renewable energy-allied services.</p>
<p>Earlier, IREDA <a href="https://www.mercomindia.com/ireda-raises-%E2%82%B915-billion-via-bonds-issue-times" target="_blank" rel="noopener">raised</a> ₹15 billion (~$179.5 million) through bonds, reflecting strong investor confidence in India’s renewable energy sector.</p>


IREDA’s Loan Approvals for Renewables Grows 129% YoY in Q3


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					</table><p>Non-banking financial company <a href="https://www.ecofy.co.in/" target="_blank" rel="noopener">Ecofy</a> has secured an investment of ₹900 million (~$10.83 million) from <a href="https://www.fmo.nl/" target="_blank" rel="noopener">FMO</a>, a Dutch entrepreneurial development bank, to facilitate product diversification and support its expansion across India.</p>
<p>The company provides loans to electric vehicles (EV), rooftop solar projects, and small and medium enterprises providing E2E digital experience.</p>
<p>The investment will be divided into two equal tranches. It comes with a commitment to climate action and is intended to fuel Ecofy’s loan book.</p>
<p>“Securing an investment from FMO marks a pivotal moment for Ecofy, reinforcing our commitment to addressing the climate finance gap for small business owners and individuals. The investment aims to play a critical role in decarbonizing energy, particularly in a rapidly growing economy like India. This collaboration not only strengthens our financial standing but also affirms our vision for a cleaner and more resilient future,” said Rajashree Nambiar, co-founder, managing director, and CEO at Ecofy.</p>
<p>“The collaboration with Ecofy gives us the chance to support improved access to climate-friendly products to individuals and SMEs in India. We are especially enthused by the convergence of impact in terms of financial inclusion and positive environmental impact,” said Cornelias Van Aerssen, Manager at FMO’s private equity department.</p>
<p>Ecofy is promoted by climate impact investor Eversource Capital, which aims to mobilize and deploy capital at scale to combat climate change and accelerate toward net zero goals.</p>
<p>“Ecofy has been set up to build a digital-first last mile climate finance solutions business to support India’s economic growth in a sustainable and inclusive manner,” said Dhanpal Jhaveri, CEO at Eversource.</p>
<p>Last December, the State Bank of India <a href="https://www.mercomindia.com/sbi-165-million-world-bank-fund-rooftop-solar" target="_blank" rel="noopener">signed</a> a $165 million line of credit from the World Bank to finance rooftop solar projects in the residential and institutional sectors.</p>
<p>Electric vehicle sales in India <a href="https://www.mercomindia.com/electric-vehicle-sales-2023" target="_blank" rel="noopener">reached</a> a record 1.53 million units in 2023, as opposed to the million units that were sold in 2022, registering a 50% year-over-year increase.</p>


Rooftop Solar and EV Financing Firm Ecofy Secures ₹900 Million


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					</table><p>In an exclusive interview with Mercom India, V K Singh, Director (Projects) at <a href="https://recindia.nic.in/" target="_blank" rel="noopener">REC Limited</a>, discusses the role the government-owned infrastructure finance company aims to play in achieving India&#8217;s ambitious 500 GW renewable energy target.</p>
<p>He elaborated on the opportunities and challenges in funding renewable energy projects and the way ahead.</p>
<p>Here are the excerpts from the interview.-</p>
<p><strong>Is REC Limited looking to be a one-stop debt solution for renewable energy projects in India? How will you achieve this?</strong></p>
<p>REC is a one-stop solution addressing debt requirements in the renewable energy sector, encompassing project development, letter of credit requirements, and even manufacturing facilities for renewable components. We can take significantly large lending exposure for a single entity/project, sufficient to cater to a project&#8217;s complete debt requirement, eliminating the need for borrowers to go to a consortium of banks. We offer significantly wider loan tenure for 15–20 years. REC has been introducing new loan products based on emerging requirements in the sector and is committed to providing all forms of financial assistance that may be required for the sector&#8217;s growth.</p>
<p><strong>What is the share of renewable energy financing in REC&#8217;s loan portfolio? Have you set any targets to increase the size of the renewables loan book?</strong></p>
<p>REC&#8217;s loan book in the renewable energy space has grown from ₹75.06 billion (~$900.71 million), i.e., 3% of REC&#8217;s loan book of ₹2.39 trillion (~$28.68 billion) in the financial year (FY) 2017-18 to ₹298.33 billion (~$3.58 billion), i.e., 6% of REC loan book of ₹4.74 trillion (~$56.88 billion) in FY 2022-23. This figure is expected to increase exponentially owing to approvals of ₹499.29 billion (~$5.99 billion) in the first half of FY 2023-24, and we target to increase our renewable energy portfolio to 30% of the loan book by FY 2030. We are striving towards realizing the above target and are currently on track to be one of the largest lenders for the renewable energy sector.</p>
<p><strong>REC has financed solar, wind, and hybrid power projects. Given that energy storage, green hydrogen, and green mobility are gaining traction, what plans does REC have for these technologies? </strong></p>
<p>In addition to conventional, renewable energy projects like solar and wind, REC has ventured into financing projects with multiple technologies such as hybrid power, pumped storage projects, energy storage, electric vehicles, manufacturing of solar modules/wind turbines, and commercial and industrial projects.</p>
<p>With multiple technologies supplementing one another, hybrid power projects have various advantages, including better grid stability and higher capacity utilization factor. REC has sanctioned financial assistance to hybrid projects and is keen to finance more such projects.</p>
<p>Pumped storage projects are increasingly becoming an attractive option to efficiently utilize electricity generation and consumption gaps. REC has sanctioned several such projects recently. We offer better interest rates and terms compared to conventional hydroelectric projects, considering the risk profile associated with them.</p>
<p>The government of India&#8217;s progressive policy framework promoting e-mobility has led to the EV market witnessing a lot of traction. REC has been one of the first movers to provide financial assistance to E-bus projects.</p>
<p>REC is aggressively exploring financing of sunrise sectors like green hydrogen, green ammonia projects, round-the-clock power projects involving bundling renewable projects with thermal power, and other similar opportunities.</p>
<p>REC is taking all steps to bring out the required solutions for the funding requirements that are in tune with the dynamic developments in the space.</p>
<p><strong>What is the ROI when it comes to renewable energy financing? What are the unique risks that RE projects pose from a financing perspective? Also, many developers feel that financing renewables is expensive and comes with many conditions. Your thoughts?</strong></p>
<p>Solar and wind renewable energy projects offer the lowest tariffs in the current market environment, indicating lower construction and operation costs than conventional generation. Developers consider returns while quoting tariffs in the bidding for power purchase agreements based on their internal expectations.</p>
<p>Due to the short completion period of these projects, delays of any kind affect financial planning, and another risk could be due to gaps in site selection, which may result in lower-than-expected energy generation. However, with the scale of investment in the sector, these risks are mitigated to a large extent with the development of better know-how.</p>
<p>Regarding the query on financing options, I would like to reiterate that REC offers one of the better financing options. We have deliberately kept significantly lower margins on renewable energy financing and offer very competitive low-cost rates to these borrowers. Renewable energy projects command lower interest rates than conventional generation projects, so the apprehension that financing for the renewable energy sector is expensive must be seen in comparative light with other electricity generation sources.</p>
<p><strong>For someone with a ringside view of the renewable energy landscape, what are the opportunities and challenges for the sector going forward?</strong></p>
<p>During the last few years, India has witnessed a remarkable increase in renewable energy capacity, elevating its position as one of the global leaders in clean energy adoption. Today, India stands fourth globally for installed renewable energy capacity (including large hydro), fourth in wind power capacity, and fourth in solar power capacity.</p>
<p>In terms of investment, India has attracted substantial funds in the renewable energy sector. Investment in renewable energy touched a record $14.5 billion (~$174 million) in FY 2021-22, an increase of 125% over FY 2020-21 and 72% more than the pre-pandemic year of FY 2019-20. This represents a substantial increase from previous years and demonstrates the growing confidence of investors in India&#8217;s renewable energy market. The investments have come from domestic and international sources, including private equity firms, venture capital funds, and multinational corporations.</p>
<p>To achieve India&#8217;s ambitious target of 500 GW by 2030, the country must add 50 GW of renewable energy capacity annually for the next eight years. This would require an investment of around ₹15-20 trillion (~$180-240 billion) by 2030.</p>
<p>Several factors have contributed to the increased investment in India&#8217;s renewable energy sector. These include favorable policy interventions, initiatives to drive clean energy, and incentives such as tax benefits, subsidies, and low-cost financing options. Technological advancements and cost reductions have further propelled investments. The falling prices of solar panels, wind turbines, and energy storage systems have made renewable energy projects more economically viable. This has attracted diverse investors who see the sector as a financially attractive opportunity.</p>
<p>Furthermore, the government has actively encouraged foreign investment in the sector. It has implemented measures such as 100% foreign direct investment in renewable energy generation and allowed investments in debt instruments like bonds. These steps have facilitated greater participation of foreign investors in India&#8217;s clean energy market.</p>
<p>The challenges involve matching capacity increases with transmission infrastructure and identifying avenues to utilize generated electricity efficiently while ensuring grid stability.</p>
<p><strong>Transmission infrastructure plays a big part in ensuring energy security. Can you elaborate on REC&#8217;s role in developing transmission infrastructure in the country?</strong></p>
<p>Over the years, REC has supported the establishment of transmission systems across the country by providing financial assistance for such projects, and currently, ₹483.93 billion (~$5.81 billion) of REC&#8217;s loan book is towards the transmission sector.</p>
<p>REC Power Development and Consultancy Limited (RECPDCL), a wholly owned subsidiary of REC, is rendering expert and value-added consultancy services to power utilities across the country to select developers for constructing transmission projects through tariff-based competitive bidding.</p>
<p>In September 2023, RECPDCL handed over the project-specific special-purpose vehicle formed to construct the Beawar Transmission to Sterlite Grid 27. On April 20, RECPDCL handed over KPS1 Transmission to Megha Engineering &amp; Infrastructures.</p>
<p><strong>REC has gone international by financing a green hydrogen project in Oman. How do you see the scope for REC in global green financing? Which geographies are you targeting and why?</strong></p>
<p>In our loan book of ₹4.75 trillion (~$56.99 billion), renewable energy stands at around 6% of our outstanding loan book. This is where a major change will happen. We are going to play a significant part as far as energy transition is concerned. We want to increase our total loan book size to about ₹10 trillion (~$119.99 billion) by the end of 2030. We target 30% of it from green projects, including e-mobility projects. A paradigm shift will happen there, and our loan book from green projects will increase substantially from 6% to 30%. However, largely, the exposure will remain within Indian territory.</p>
<p><strong>REC published its Green Finance Framework earlier this year. With India&#8217;s energy transition goals in place, will REC phase out financing for coal and other fossil fuel projects? Have you set any targets and timelines to achieve this?</strong></p>
<p>As part of a sustainable financing initiative, REC has established this Green Finance Framework as the basis for issuing green bonds, loans, and other financial instruments used to finance and refinance eligible green projects that conform to the green finance principles.</p>
<p>However, thermal power still forms the base load of the country&#8217;s power sector, and we continue to provide funding to those thermal projects that conform to all ESG guidelines. Our country is growing rapidly, and energy demand is rising quickly, which needs to be met. For this reason, various states are also taking up new thermal projects. REC, the largest lender in the country&#8217;s power sector, will consider financing them, provided these projects meet our appraisal/viability requirements.</p>


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