USAID backs $100 million of loans to India renewables sector

Solar power producers are set to benefit from a $100 million investment in India’s clean energy sector backed by the US Agency for International Development.

USAID has announced a partnership with US investment firm Northern Lights Capital Group, aimed at promoting sustainable energy capacity on the sub-continent.

The body will provide a 40% credit guarantee for investors in Nereus capital’s India Alternative Energy Fund, which is managed by Northern Lights.

USAID administrator Raj Shah said: “USAID will be able to dramatically leverage large-scale funding to help India’s transition to a low carbon economy and open up new development opportunities for enhanced energy access.”

He claimed the investment could eventually create up to 400MW of sustainable energy capacity.

The Indian government has set a target of 30,000MW of renewable energy generation capacity in the next five years.

The fund will invest in independent power producers developing, building and operating alternative energy projects in India, including solar.

Jonathan Winer, managing director at Nereus, said: “Challenges for traditional thermal power generation and persistent power deficits dictate that an increasing proportion of new power generation capacity in India will be derived from alternative energy.”

Ben Hubbard, director of USAID’s Development Credit Authority, said that the loan guarantee would help leverage private sector investment.

“Through a comparatively small investment by the U.S. Government, we can ensure that U.S. investors can make low-risk investments that deliver high-reward for the people of India,” he said.