ReNew Power Gets Green Project Finance of Rs 800 Cr from Bank of America

ReNew Power has received a loan/ green project finance from Bank of America totaling roughly Rs 800 crore, the lender’s first local project financing agreement in the renewable energy industry after a protracted absence. The company will benefit from cheaper funding costs thanks to the five-year green loan facility in rupees, as the money will be principally utilised to prepay an existing offshore loan before it comes due.

In the most recent primary auction held by the Reserve Bank of India, three-month Treasury Bills yielded 6.45%, and an onshore loan could be offered at a spread of 200–250 basis points over those notes.

According to Kailash Vaswani, President of Corporate Finance at ReNew Power, “This is a refinancing facility which will assist us to save funding cost of approximately 200 basis points. With higher US Treasury (yields), raising capital domestically is preferable since we can avoid hedging fees. The loan will assist in reducing costs for managing currency risk in the face of volatile global markets. Two specific solar projects in India are connected to the credit line. These two projects’ cash flows will be used to pay back the loan.”

“Given India’s desire to produce up to 500 GW of green energy by 2030, our first project finance loan in the renewable energy industry will pave the way for many additional loans,” said Sanjay Agarwal, Head of India Corporates, Bank of America. The US-based lender has a $1.5 trillion worldwide goal for sustainable finance.

Long-term financing from the US International Development Finance Corporation had previously been used by ReNew Power. By 2040, ReNew Energy Global Plc said it hoped to have net-zero carbon emissions. Through a thorough program of actions, the organisation hopes to reach its goal.

To increase the capacity of solar and wind energy, it is reportedly aiming to spend nearly Rs 30,000 crore over the next two years. At their subsidiary level in August, Bank of America assisted Tata Power in raising two sustainability-linked loans (SLL) totaling $320 million. These loans totaled $125 million for a bilateral loan and $75 million for a club loan.