India’s clean energy gets more credit than coal in its third year

Indian lenders have poured more funds into clean energy projects than coal-based projects for the third year in a row in 2020, with more likely to go to the renewable energy sector in the coming years after Prime Minister Narendra Modi set ambitious targets to reduce energy consumption last month Announced emissions.
Last year, clean energy projects received 74% of total funding from financial institutions, or Rs 243.8 billion ($ 3 billion), according to a report by New Delhi-based research organizations Climate Trends and Center for Financial Accountability. That’s 6% more than 2019 clean energy project approvals of about Rs.229.71 billion in 2019.
Only Rs. 85.2 billion, or 26% of 2020 funds from Indian lenders, went to coal-fired power plants, data from the report showed. This corresponds to an 86% decrease in permits for coal-fired power plants since 2017 and is in line with the global decline in the availability of funds for fossil fuel projects.
This trend is expected to continue after Modi announced India’s plan for net zero emissions by 2070 at COP26. Modi also raised India’s 2030 target for low-emission energy capacity from 450 GW to 500 GW and wants the country to generate half of its electricity from renewable sources. Renewable energies account for 40% of India’s currently installed capacity of 392 GW, while coal remains the mainstay at 52%, according to government figures.
The report, which analyzed 42 project finance loans worth Rs.329.97 billion that closed last year, showed that solar energy received most of the funding and commercial banks did not lend to coal projects. Only the state-run Power Finance Corporation and the Rural Electrification Corporation paid funds for fossil fuel-based projects.
Though lenders prefer clean energy, coal lending grew 40% to 85.2 billion in 2020, and the number of coal projects funded has also declined, despite India having significant coal capacity online with about 34 GW under construction and another 21 GW in the pipeline has asked.
“Worryingly, the stranded risk of these assets is significant,” said Climate Trends and CFA in the report. “As the growth of Indian energy demand slows and the number of installations of renewable energies increases, the utilization of coal-fired power plants will continue to decline. As such, their profitability will continue to deteriorate. “

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