Promoting renewable energy in India

The Indian government is promoting renewable energy to reduce its increasing fossil fuel dependency. A loan from NIB to the Indian Renewable Energy Development Agency is set to support the effort.

India’s growing energy consumption has resulted in the country becoming increasingly dependent on fossil fuels such as coal, oil and gas. Also taking into account the negative effects on the environment caused both locally and globally by the use of fossil fuel, the Indian government has taken action to increase the usage of non-conventional energy production.

In order to decrease India’s dependence on fossil fuels, the government has launched a policy on conserving energy and promoting renewable energy. Renewable energy is crucial for controlling the emission of greenhouse gases, but it also plays an important role in safeguarding India’s energy independence.

The responsibility for the implementation of this policy was given to the Indian Renewable Energy Development Agency Ltd. (IREDA). It is a non-banking financial public sector company founded in 1987.

One of the challenges within the energy sector in India is getting electricity to the vast population living in the rural parts of the country. Of the 1.2 billion population, over 70% live in the rural parts of the country.

At present, renewable energy accounts for 5% of India’s electricity generation capacity. The government plans to double this share by 2012. The potential for renewable energy in India is great. It is estimated that wind power, biomass and waste energy alone could produce 86,880 MW.

In addition, there is a great potential to use solar energy in the power grid. During the past eight years, IREDA has financed projects for energy conservation and efficiency within industries such as sugar, paper and textiles. IREDA’s own funding sources include the national government, the World Bank, ADB, IBRD and now also NIB.

A USD 50 million loan agreement signed between IREDA and NIB in March 2009 is aimed at financing the transfer of advanced environmental technology and equipment supplies from the Nordic and Baltic countries for renewable energy projects in the wind power, biomass and small-scale hydropower sectors in India.