Goyal seeks cheap funds, foreign investment for green energy

Union minister for power, coal and new and renewable energy Piyush Goyal has sought cheaper credit along with foreign investment for funding the country's ambitious renewable energy programme, which, if realized, would help the country build green power plants faster than China.

India is currently ranked as the world's third-biggest polluter after the US and China. Goyal's comments on Sunday shed some light on how the government expects India to afford these targets.

Speaking at a conference on renewable energy in New Delhi, Goyal outlined the government's target of generating 170 Giga Watts of clean energy by 2022. That would be a fivefold rise and exceed the total power capacity of most nations.

India largely relies on dirty, inefficient coal-fired plants and has some of the planet's most toxic air, even as it suffers a perennial power shortage.

''Interest rates will come down,'' Goyal said on the sidelines of the conference, adding he sees a greater role for overseas funding sources in part as stability in the rupee cuts the cost of hedging currency risk. ''A lot of international money is available for renewables. We need to tap that.''

Prime Minister Narendra Modi, in his conference speech, said the clean-energy drive is part of a push to curb blackouts and provide electricity to every Indian household.

While world leaders such as US President Barack Obama back the effort to harness power from the sun, wind and water, finding the needed $200 billion, Goyal estimates, is an obstacle.

Modi's administration announced plans at the conference, called RE-Invest, for renewables to account for 15 per cent of India's energy mix within a decade.

It said banks have committed to finance more than Rs3,000 crore ($48 billion) of projects and that manufacturers intend to set up equipment for 60 Giga Watts of production capacity. State Bank of India, the country's largest lender by assets, said it can finance Rs75,000 crore of projects by 2020 depending on the viability of the proposals.

Lower hedging expenses could cut the total cost of overseas loans to 6 to 7 per cent in the next two years, the power minister said. At home, the Reserve Bank of India left interest rates unchanged this month following an unscheduled cut in January to 7.75 per cent after inflation eased.

''The trend of reducing interest rates has already started and interest rates will come down,'' Goyal said.

Modi's nine-month-old administration will try to support steps such as green bonds, he said, adding he's confident that pension funds can be wooed into renewable investment.

''We are developing a framework, which will make sure policies are stable and that the bankability of renewable power purchase agreements are ensured,'' Goyal said.