India

IN-4:Financing Schemes of IREDA

Policy Description

The mission of IREDA is to promote, develop and extend financial assistance for renewable energy and energy efficiency/conservation projects.  The IREDA financial services include direct project financing, equipment finance, business development finance, loans for manufacturing facilities of energy efficiency equipment, and loans to banks/financing institutions for on-lending. 

IREDA also promotes and finances the delivery of energy efficiency services and equipment, implementation of Demand Side Management (DSM) and the development of Energy Service Companies (ESCOs). Loan conditions are preferential compared to commercial loans.

Description

 

The India Renewable Energy Development Agency Limited (IREDA) is a Public Limited Government Company established in 1987 under the administrative control of the Ministry of New and Renewable Energy (MNRE). The mission of IREDA is to promote, develop and extend financial assistance for renewable energy and energy efficiency/conservation projects [1] [3].  The IREDA financial services include direct project financing, equipment finance, business development finance, loans for manufacturing facilities of energy efficiency equipment, and loans to banks/financing institutions for on-lending. It is funded partly through the Central government and also receives funding from the German development bank (KfW), French development bank (AFD), Nordic Investment Bank (NIB), European Investment Bank (EIB), Japan International Cooperation Agency (JICA), World Bank, Asian Development Bank, and other international financial institutions. From 2006 to 2010, IREDA’s total funding grew by 70 percent from approximately USD 391 to USD 665 million.

IREDA also promotes and finances the delivery of energy efficiency services and equipment, implementation of Demand Side Management (DSM) and the development of Energy Service Companies (ESCOs). Loan conditions are preferential compared to commercial loans. Credit lines offered through IREDA for energy efficiency and conservation projects must be a minimum of INR 50 lakhs and offers an interest rate between 12.25% and 13% [6]. Registration fee is charged  between Rs 10,000 to Rs 60,000 depending on the loan amount. A front end fee of 0.5% to 1.25% of the loans amount is also charged

 

Cumulative loan sanctions and disbursements from 1987 made in energy efficiency and conservation amounted to about 5.2% and 2.8% respectively. In 2011-2012, energy efficiency and conservation loan sanctions amounted to about 0.4% and disbursements were about 4% [5].

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic

Position in the Pyramid

About Us

Participation: Voluntary

Policy Linkages

Supports
Supports

Agencies Responsible

India Renewable Energy Development Agency Limited (IREDA)
Bureau of Energy Efficiency (BEE)

Primary Objective: Energy

Objective

• To give financial support to specific projects and schemes for generating electricity and / or energy through new and renewable sources and conserving energy through energy efficiency. • To maintain its position as a leading organization to provide efficient and effective financing in renewable energy and energy efficiency / conservation projects. • To increase IREDA`s share in the renewable energy sector by way of innovative financing. • Improvement in the efficiency of services provided to customers through continual improvement of systems, processes and resources. • To strive to be competitive institution through customer satisfaction

Target Group

Nine areas eligible for assistance including Energy Efficiency & Energy Conservation and New & Emerging Technologies (*2).

Driver of energy consumption or emissions affected by policy: Energy efficiency

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Not applicable.

Quantitative Target? no

Progress Monitored? yes

Verification Required? no

Enforced? no

Requirements on the Target Group

Compliance with the IREDA financing guidelines [1b] and loan conditions.

Support by Government

Funds are partly provided from the state budget. 

Implementation Toolbox

Financing guidelines provided by IREDA available at

http://www.ireda.gov.in/forms/contentpage.aspx?lid=740

http://www.ireda.gov.in/pdf/Financing%20Norms.pdf

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions Not available. Not available.
Estimated costs/benefits for industry Not available. Not available.
Estimated cost for government Not available. Not available.
Other Benefits
General Benefits Reduce GHG emissions and other environmental pollutants, reduce energy demand, improve competitiveness.
Specific Benefits Reduce cost of capital for energy efficient investments, improve competitiveness.

References & Footnotes

References

[1] [1a] Indian Renewable Energy Development Agency Ltd (IREDA): http://ireda.gov.in/EEC.asp [1b] Indian Renewable Energy Development Agency Ltd (IREDA), Financing Guidelines: http://www.ireda.gov.in/homepage1.asp?parent_category=1&category=49

[2] Financing conditions IREDA http://www.ireda.gov.in/pdf/Financing%20Norms.pdf

[3] IREDA: http://besharp.archidev.org/spip.php?article53

[4] New Energy India (2008). Generic Eligibility Criteria and Conditions for Loans for Specific RE Technologies.

[5] IREDA (2012). Annual Report (2011-2012). Available at http://www.ireda.gov.in/writereaddata/Ireda-AR-11-12.pdf

[6] IREDA (2013). IREDA Financing Norms. Available at http://www.ireda.gov.in/forms/contentpage.aspx?lid=740

Footnotes

(*1) IREDA monitors whether the applicant follows the financing guidelines, as well as manages the loan and the portfolio.

(*2) a) Small Hydro Power, b) Medium & Large Hydro Projects above 25 MW, c) Wind Energy, d) Bio‐Energy, e) Solar Energy, f) Energy Efficiency & Energy Conservation, g) Bio‐fuel / Alternate Fuel, h) New & Emerging Technologies, i) Developmental Activities/ New Initiatives.