The World Bank has announced that it will provide $220 million in loans and a $80 million guarantee to India’s Energy Efficiency Services Limited (EESL).
The funds will be utilized for EESL’s India Energy Efficiency Scale-Up Program which is aimed at increasing energy savings in residential and public sectors, strengthening EESL’s institutional capacity and enhancing its access to commercial financing.
Under the Program, EESL will deploy 219 million LED bulbs and tube lights, 5.8 million ceiling fans, and 7.2 million street lights, which will be supplied by private sector manufacturers and suppliers.
The key components of the operation include: creating sustainable markets for LED lights and energy efficient ceiling fans; facilitating well-structured and scalable investments in public street lighting; developing sustainable business models for emerging market segments such as super-efficient air conditioning and agricultural water pumping systems; and strengthening the institutional capacity of EESL. Moreover, the program will help to increase private sector participation in energy efficiency, including through private sector energy service companies.
The $220 million loan from the International Bank for Reconstruction and Development (IBRD) has a 5-year grace period and a maturity of 19 years. The $80 million IBRD guarantee will partially cover re-payment risks to commercial lenders or investors to enable EESL to raise funds for its program.
The guarantee is expected to leverage some $200 million in additional financing to help EESL with its growing portfolio and future investment needs.
The investments under the program are expected to avoid lifetime greenhouse gas emissions of 170 million tons of carbon dioxide and contribute to avoiding an estimated 10 GW of additional generation capacity. This would be over 50 percent of the National Mission for Enhanced Energy Efficiency target of 19.6 GW indicated in India’s Nationally Determined Contributions (NDCs) under the Paris Accord.
“This energy efficiency program for results will help India meet its NDC commitments and move further towards a more resource-efficient growth path,” said Junaid Ahmad, World Bank Country Director in a media statement.
“The additional guarantee from the World Bank will support EESL to access new sources of commercial funding, diversify its investor base, and establish a track record for future access to financial markets,” he added.
World Bank has been one of the leading investors in India’s renewable energy sector. In 2017, Mercom reported that the government of India and the World Bank signed agreements to develop large-scale solar parks in India. As part of the agreements the World Bank agreed to provide $100 million to develop solar power generating projects in the country.
Moreover, last year the State Bank of India (SBI) and the World Bank also announced $357 million in credit facilities for seven Indian solar companies for grid-connected solar rooftop projects with an aggregate capacity of 575 MW.