India's energy supply gets greener: KfW finances renewables in India

• Credit line for EUR 200 million
• Increased energy generation capacity based on solar and wind power
• Additional power supply for over 270,000 Indian homes
• Improved environmental and social standards

On behalf of the German Federal Ministry for Economic Cooperation and Develop-ment (BMZ), KfW has signed a loan agreement for EUR 200 million with Rural Elec-trification Corporate Limited (REC), a promotional institution for developing the pow-er supply in rural India. REC will pass the funds on to investors in the form of low-interest loans, so that they can invest in energy production based on renewables (solar and wind power). These loans will be supplemented by counterpart contribu-tions of up to 30% from the borrowers as well as contributions from other banks under syndicate financing packages. The funds provided will thus be leveraged by the private sector. The overall investment is expected to amount to some EUR 285 million, and will also be part of the German-Indian solar partnership.

“India ranks third in the list of countries with the highest CO2 emissions. In light of the ongoing growth in the economy and population, demand for electricity will also continue to rise. KfW’s financing to promote the increased use of renewables will make an important contribution to slowing the rise in greenhouse gas emissions and reducing the deficit in the power supply”, says Professor Joachim Nagel, Member of the KfW Group Executive Board.

The Indian government is planning to expand capacity for producing power from renewables to 175 gigawatts by 2022. Renewables would thus represent some 50% of the current total generation capacity of around 344 GW. Photovoltaic plants are due to contribute 100 gigawatts, with a further 60 GW coming from wind power, 10 GW from biomass and 5 GW from small-scale hydropower plants. The measures funded with this KfW-financed credit line will provide 200 megawatts, saving up to 285,000 tonnes of CO2 every year. This new source of capacity will also be able to supply power to around 270,000 homes.

A complementary measure will also see REC receiving a financial grant of EUR 1 million for implementing an environmental and social management solution, which will significantly improve standards in the Indian energy sector.

More information on KfW Development Bank is available at: www.kfw-entwicklungsbank.de/International-financing