India to use tax-free bonds for funding renewable energy projects

State-owned companies including the Indian Renewable Energy Development Agency (IREDA), Power Finance Corp (PFC) and Rural Electrification Corp (REC) plan to raise around INR50 billion (US$779 million) through the sale of tax-free bonds for renewable energy projects in India.

IREDA director of finance SK Bhargava told PV Tech that IREDA alone has made a request for around INR20 billion, but has not yet received final confirmation of the amount.

He added: “The purpose of raising this money is to put online renewable energy projects. Renewable energy projects have to be promoted in India. These are the key funds which have to be provided for this sector. That is why the government of India has decided to put in some money to tax-free bonds.”

The green bonds will help India’s plan to raise renewable energy capacity to 175GW by 2022, of which 100GW will be solar.

Local reports said the companies will lend the money to solar energy developers at a low interest rate of 10.5%.

Last week, India was forecast to enter the top five countries for solar capacity this year, moving up from tenth place last year, according to consultancy firm Bridge to India’s annual report.

Meanwhile a PV Tech analysis also looked behind the numbers of India’s 100GW solar target.