Follow India Renewable Energy News on WhatsApp for exclusive updates on clean energy news and insights

Renewable Energy Industry Pushes for NaBFID-Style Green Bank to Unlock Long-Term Finance

Mumbai, January 25: Renewable energy developers have renewed calls for the creation of a dedicated Green Bank, modelled on the National Bank for Financing Infrastructure and Development (NaBFID), to improve access to long-term and affordable funding for clean energy projects.

Industry stakeholders believe that extending tax benefits similar to those available to NaBFID would significantly enhance the viability of such an institution. A specialised climate finance entity, they argue, could play a critical role in mobilising private capital into renewable power, energy efficiency initiatives, electric mobility, and other green technologies.

The proposed Green Bank would be able to raise funds through green bonds and pooled financing mechanisms, helping channel long-tenure capital into projects with long gestation periods. A senior Tata Group executive noted that access to overseas dollar-denominated funding would be particularly important, given that transmission assets typically have project lives of around 25 years, while pumped storage projects can extend to 45 years.

“Large players can still manage long-term funding, but smaller developers struggle to secure capital over such extended tenures,” the executive said, adding that interest rates should ideally be below 8% to keep project costs manageable.

Abhishek Pareek, Head of Group Finance at Waaree Energies, echoed the view, saying an institution similar to NaBFID could provide meaningful support to the renewable sector.

NaBFID was established in 2021 through an Act of Parliament to finance long-term infrastructure projects. In addition to initial government capital, the institution received a 10-year tax holiday to support profitability and was notified as a public financial institution, enabling it to raise funds through market borrowings and bank loans.

Shilpa Kumar, Managing Director and Head of India at British International Investment, said the creation of a dedicated climate finance institution is essential, but cautioned that it should address genuine funding gaps rather than displace existing pools of capital. She noted that such an entity could help mitigate perceived risks that continue to deter traditional lenders.

“Most importantly, a specialised institution can build a repository of risk learnings, bridge confidence gaps, and widen access to capital markets,” she said.

Industry leaders also highlighted the growing demand for electricity, driven by factors such as the rapid expansion of data centres. DV Manjunatha, Chairman and Managing Director of Emmvee Photovoltaic Power, said a Green Bank would be vital for supporting India’s net-zero ambitions amid rising power consumption.

“To meet our climate commitments and future power demand, a dedicated green financing institution is necessary,” he said.

However, some executives suggested alternative approaches. Sandeep Agarwal, Managing Director of Greenzo Energy, argued that instead of creating a new entity, commercial banks should be permitted to raise green bonds and allocate a portion of their lending specifically to renewable projects. Citing international examples, he said banks in the UK raise green bonds at rates of 5–5.5% and fund renewable projects at around 7.5%.