According to the Ministry of New and Renewable Energy, meeting India’s clean energy goals would require more than $100 billion in investment over the next six years.
To achieve this ambitions target India is contemplating on creating a Green Bank, also know as Green Investment Fund, which will help in driving funding and innovation into solar energy.
Green investment funds are publicly funded, specialized institutions that finance clean energy projects in partnership with private lenders, both domestic and international. A green investment fund has what private banks lack: a mission to expand clean energy, specialized underwriting expertise in clean technology and access to low-cost public capital. And because green investment funds typically reinvest their income, effectively recycling public funds, they can create a bigger market impact than government subsidies or incentives alone. Green investment banks are expanding around the world and have been effective in including institutions in New York, Connecticut, UK, Australia, Japan and Malaysia.
A research conducted by NRDC and the Council on Energy, Environment and Water found out that green investment fund will
- Lowering the Cost of Capital
- Leverage Limited Public Funds to Increase Private Investment
- Finance Under-served and Small-Scale Projects
In addition to direct lending at lower rates, the green investment fund can offer financial products that help make commercial banks more comfortable with financing clean energy projects, such as partial credit guarantees or credit insurance. A green investment fund can help bridge the gap between the goals of private finance and public funding. Ramping up clean energy investment is critical to help build a more sustainable, prosperous low-carbon economy that achieves the country’s Paris targets and makes India a true front runner on climate change.