Investors, banks willing to go green again
Namrata Singh | TNN
Mumbai: After witnessing a dip in 2009 on account of the global financial crisis, the green sector in India is once again attracting the attention of investors and banks.
“Investment into the green sector is resuming former growth rates. We expect the investment in India to continue to be strong for three reasons — high ROEs (return on equity), increasing investor comfort with renewable generation risks, and a strong commitment from the central government to ensure renewable feasibility,’’ said Sumit Kadakia, consultant, EVI, an integrated climate change company.
The growth of the green sector is substantiated by the pace of lending to these projects by banks. Yes Bank, which has set aside nearly 20% of its infrastructure lending to fund clean technology, is working towards extending a Rs 400-crore loan to an entrepreneur (whose name was not disclosed) for a Rs 700-crore project involving management of municipal solid waste and its disposal in an environmentally friendly manner.
“This will be Yes Bank’s largest green project financing till date,’’ Somak Ghosh, president (corporate finance & development banking), Yes Bank, told TOI.
The bank recently approved a loan of Rs 100 crore to wind farm project equipment supplied by Enercon — which operates under the IPP (independent power producer) model — on a tenor of nine years.
“If you exclude the externalities like carbon credit pricing, the outcome of Copenhagen, etc, there is exuberance among lenders to this sector,’’ said Ghosh.
Yes Bank is not the only bank looking at funding green projects. State Bank of India has tied up with Managing Emissions, a Mumbai-based company involved in the business of setting up projects for renewable energy and energy efficiency with carbon-embedded assets, to provide 20,000 energy efficient plants to rural India through micro-finance loans. The project involves building biogas plants at farmers’ houses.
The project aims at reducing greenhouse emissions by saving conventional fuel such as firewood, LPG and kerosene. Under the project, farmers contribute 50% of the cost and the balance 50% is financed through low-interest micro-finance loans from the State Bank of India. “The repayment of the micro-finance loan is then structured in a manner by which the income received from carbon credits is used for the repayment,’’ said Vishwajit Dahanukar, managing director, Managing Emissions.
Green IPPs such as Oriental Green Power Co (OGPL), which are filing for public offerings, too have received positive feedback from various investor publications. “Smaller, distributed generation companies such as Husk Power, a provider of rural electrification through rice husk, are also receiving significant investor interest,’’ said Kadakia, who is of the view that the current growth will continue regardless of the changes in the CER (certified emission reduction) market due to uncertainty in future carbon prices.
“Investors primarily discard these returns and view them as icing on the cake,’’ said Kadakia.
Clearly, after witnessing heavy volatility in carbon credit prices since end-2008, the industry seems to have moved on to achieve its long-term goals, leaving aside factors like CER prices as mere externalities. Powering Renewable Energy
tYes Bank is working towards extending a Rs 400-crore loan to an entrepreneur for a solid waste disposal project
tIt has approved Rs 100-cr loan for wind farm project equipment
tSBI has tied up with a Mumbaibased company to provide 20,000 energy efficient plants in rural India