India: Clean Energy Finance Investment Program

Sovereign Project | 46268-001

Summary

ADB and the Government of India are working together to provide long-term financing options for renewable energy projects, including wind, biomass, hydropower, and solar. The Clean Energy Finance Investment Program is supporting lending for renewable energy projects by the Indian Renewable Energy Development Agency. Private capital is being leveraged in partnership with the Indian Renewable Energy Development Agency in order to increase lending for at least 10 renewable energy projects, and to provide training for government officials to increase their knowledge of project finance.

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Consulting Notices

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Procurement Notices

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Procurement Documents

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Project Name Clean Energy Finance Investment Program
Project Number 46268-001
Country India
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
MFF Facility Concept 0087-IND: Clean Energy Finance Investment Program
Ordinary capital resources US$ 250.00 million
Ordinary capital resources US$ 250.00 million
MFF Facility Concept: Clean Energy Finance Investment Program
European Investment Bank US$ 253.00 million
Japan International Cooperation Agency US$ 280.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector Finance - Infrastructure finance and investment funds
Gender Equity and Mainstreaming No gender elements
Description ADB and the Government of India are working together to provide long-term financing options for renewable energy projects, including wind, biomass, hydropower, and solar. The Clean Energy Finance Investment Program is supporting lending for renewable energy projects by the Indian Renewable Energy Development Agency. Private capital is being leveraged in partnership with the Indian Renewable Energy Development Agency in order to increase lending for at least 10 renewable energy projects, and to provide training for government officials to increase their knowledge of project finance.
Project Rationale and Linkage to Country/Regional Strategy India has enjoyed high economic growth in the last decade. However, additional growth is inhibited by chronic electricity shortages, which limit commercial activity. Around 300 million citizens (around 25% of India's population) have no access to electricity, while many with access have an intermittent supply. The government's push to narrow this electricity supply gap has increased India's dependence on fossil fuels, particularly imported diesel fuel and coal. To balance the conflicting objectives of high economic growth, climate change, and energy security, India is working to increase its use of renewable energy. A major challenge to sustaining high levels of renewable energy in India is a lack of financing. Due to the relatively high upfront cost of renewable energy projects, loans of 12 or more years are usually required to make the projects financially viable. However, such long-term funds are scarce in the Indian market, where project lending is predominantly bank-based, and commercial banks have difficulty lending long-term funds from short-term deposits.
Impact increased renewable energy infrastructure.
Project Outcome
Description of Outcome facilitated investment in renewable energy.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Enhanced availability of long-term financing to support renewable energy projects

Improved institutional capacity of IREDA

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects The tranche 1 loan is classified as category FI for impacts on the environment, involuntary resettlement, and indigenous peoples under ADB's Safeguard Policy Statement; the same is expected for all future tranches. Renewable energy subprojects generally offer environmental benefits because they serve as an alternative to the fossil fuel extraction, transport, and combustion associated with conventional power generation. Renewable energy subprojects funded under the MFF are generally of a small size. ADB will not finance any category A subproject under tranche 1 but may consider financing category A subprojects under tranches 2 and 3. The financing of category A subprojects will strictly follow the ADB safeguard policy for financial intermediation loans and the requirements in the ESMS. IREDA is committed to working to meeting international best practices in subproject environmental and social safeguard implementation requirements to address subproject impacts, as requested by the international lenders. Under the MFF, IREDA will establish a functioning ESSU satisfactory to ADB (and, over time, to other development partners), including the nomination of two designated full-time staff members for day-to-day implementation of the ESMS, and a responsible institutional compliance officer. The ESMS will be maintained throughout the term of the MFF. An associated TA, to be provided in 2014 or 2015, will assist IREDA to attain the required capacity to implement the ADB safeguard system. If capacity gaps exist, consultant support will be provided to fill gaps until the required capacity is in place. By the end of tranche 1, the ESSU should be capable and self-sustaining.
Involuntary Resettlement Same as above.
Indigenous Peoples Same as above
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultations have been conducted on executing agency (IREDA) and subproject levels on, respectively, (i) IREDA's institutional capacity, including management structure, financial and risk management, credit procedures, existing environment and social safeguard practice, and subproject compliance with local laws and regulations; and (ii) subproject transaction structure, financial performance, technical review, and environment and social safeguard reviews. On the subproject level, consultations have also been conducted in the local communities of the subproject sites during the facility due diligence.
During Project Implementation During facility implementation, IREDA shall establish an environment and social safeguard unit, fully staff it, and follow the guidelines developed in the environment and social safeguard management system when accessing the ADB funds. This includes consultations on the subproject level, required for due diligences on environmental impact, indigenous people, and involuntary resettlement, including the establishment of grievance redressal mechanism and the review of land acquisition process, all in the local communities of the subproject sites.
Business Opportunities
Consulting Services All procurement to be financed under the MFF will be carried out in accordance with ADB's Procurement Guidelines. ADB will encourage IREDA to require its subborrowers to adopt internationally competitive bidding procedures to the extent possible when the amount of the investment is unusually large and economy and efficiency can be gained through such procedures. For procurement of goods and services to be financed by subloans from the ADB loan, IREDA will ensure that prices are reasonable and that relevant factors e.g., time of delivery, efficiency, reliability, suitability for the subproject, and (for consulting services) quality and competence are taken into account.
Procurement All procurement to be financed under the MFF will be carried out in accordance with ADB's Procurement Guidelines. ADB will encourage IREDA to require its subborrowers to adopt internationally competitive bidding procedures to the extent possible when the amount of the investment is unusually large and economy and efficiency can be gained through such procedures. For procurement of goods and services to be financed by subloans from the ADB loan, IREDA will ensure that prices are reasonable and that relevant factors e.g., time of delivery, efficiency, reliability, suitability for the subproject, and (for consulting services) quality and competence are taken into account.
Responsible ADB Officer Anqian Huang
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Indian Renewable Energy Dev't Agency Ltd. (IREDA)3rd Floor, August Kranti Bhawan
Bhikaiji Cama Pleace,
New Delhi -110066, India
Timetable
Concept Clearance 09 May 2013
Fact Finding 01 Apr 2014 to 11 Apr 2014
MRM 29 May 2014
Approval 30 Oct 2014
Last Review Mission -
Last PDS Update 16 Mar 2015

MFF Facility Concept

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 533.00 Cumulative Contract Awards
ADB 0.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 533.00 - 0.00 0.00 %

MFF Facility Concept 0087-IND

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1,000.00 Cumulative Contract Awards
ADB 500.00 - 0.00 0.00 %
Counterpart 500.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
MFF-Clean Energy Finance Investment Program (Facility) Environment and Social Management System Arrangements May 2014

Evaluation Documents

See also: Independent Evaluation

No documents found.


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