India’s 2022 budget gives boost to its RE sector growth

The spending plan provided for the issuance of sovereign green bonds.

India’s renewable energy sector is expected to continue its growth after the government sought to issue sovereign green bonds under its 2022 budget, the Institute for Energy Economics and Financial Analysis (IEEFA).

The union budget 2022 provided that green bonds will be issued for projects in aid of the country’s carbon reduction target.

The IEEFA noted other states, such as France, Germany, the UK, and Indonesia have likewise issued sovereign bonds, which proved to be an “essential source” of capital to fund the clean energy transition of emerging states.

“Whilst no other details have been shared regarding the issuance size and allocation for specific industries and technologies, this is a welcome move,” IEEFA’s Shantanu Srivastava said.

“And it in fact echoes what has already been happening. Several industry players have raised capital through the green bond route in the past.”

At present, the National Solar Mission has a target of 100 gigawatts of solar photovoltaic by the end of the year, which has been revised up from only 20GW by 2022 in January 2010. This growth was sustained by the support both from domestic and global capital, mainly from debt.

“The biggest boon for the renewable energy sector has been the access to global bond markets,” he added.

“The international bond market has demonstrated immense depth, proactiveness and boldness towards the sector, thanks to global understanding, high yield offerings and the initial success and pedigree of large players.”