Indian Renewable Energy Lending Up By 60%, Says CFA Report

Renewable Energy Lending Up By 60%, Says CFA Report

The Centre for Financial Accountability (CFA) released its seventh annual Coal Versus Renewables Investment report today. The report, which traditionally looked at project finance lending to coal, solar, and wind, increased its scope of analysis this year to include corporate finance lending to companies engaged in coal power and mining in India.

The report shows project finance lending to renewable energy projects in India increased by over 60% in 2023, whereas for a third consecutive year, there was no project finance lending to coal power projects.

“Over the last seven years, we’ve consistently seen an increase in project finance to solar and wind power projects. This shows there is investor confidence in renewable power projects. However, since we expanded the scope of this report this year to include corporate finance, we note a significant lending coming in from the US to companies engaged in coal power expansion in India” said Joe Athialy, Executive Director, of Centre for Financial Accountability.

While the report shows a decline in project finance for coal power projects, the data gathered showed over US$3 billion in corporate finance lending to coal power projects. Most of this lending was in the form of underwriting services provided by US-based financial institution, Jefferies Financial Group, to Adani and JSW Energy.

Jefferies Financial Group, a US-based financial institution, provided more than US$2 billion in underwriting services to JSW Energy and Adani in 2023. It’s the only US-based financial institute to provide corporate finance to coal-lined companies in India.

“While Western countries have been dilly-dallying on increasing climate finance for the developing world, its private sector seems to be lending to companies currently engaged in coal power expansion,” added Athialy.

Corporate finance is not tied to specific assets and hence does not necessarily fund coal expansion projects directly. However, companies generating most of their revenue from coal often use additional financing to expand their coal power assets.

Besides US-based Jefferies, Indian commercial banks such as State Bank of India, Kotak Mahindra Bank, ICICI Bank, and Axis Bank collectively provided US$752 million in loans and underwriting services to companies with active coal expansion plans.

For renewable energy projects, Union Bank of India was the largest project finance lender though India based foreign banks provided over US$ 1.5 billion in project finance.