Seventh Edition Centre For Financial Accountability Report “Coal vs RE Investment in 2024” Released

The seventh edition Centre for Financial Accountability report “Coal vs RE Investment in 2024” released yesterday, shows that project finance lending to Renewable Energy projects has increased by over 60% in 2023, whereas for a third consecutive year, there was no project finance lending to coal power projects.

The report shows a decline in project finance for coal power projects however this year’s report has also included Corporate Finance lending to companies engaged in coal power and mining and found US$3 billion in corporate finance lending to coal power projects.

Some Key Findings-

• Total funding for renewable energy projects in 2023 was 63% higher compared to 2022 levels, reaching a total of INR 30,255 crore (USD 3,663 million).
• Within renewable energy technology, Solar power projects were dominant in 2023, accounting for 49% of renewable energy deals, closely followed by hybrid projects at 46% and wind at 6%.
• Gujarat was the biggest beneficiary of renewable energy lending, with INR 9,857 crore (USD 1,193 million) going towards almost 2.2 GW of capacity, or 25% of all financed renewables capacity. The second biggest beneficiary was Karnataka, with INR 4,593 crore (USD 556 million) for 663 MW of capacity.
• More than 96% of coal-linked company financing in India from commercial banks was provided through underwriting, with the remaining 4% provided as loans. Banks headquartered in the US provided the majority of corporate finance (65%) to coal-linked companies in India in 2023.
• Commercial banks provided the majority of funding: majority of loans (68%) came from commercial banks. The share of funding provided by government banks was 27%. Notably, the Union Bank of India was the largest lender for renewable energy projects, providing INR 4,500 crore (USD 545 million) in loans.

Renewable energy projects finance have gone up every year for three years but in 2023 it went up by 60% which shows the investor confidence in renewable power projects.

“Over the last seven years, we’ve consistently seen an increase in project finance for solar and wind power projects. This shows there is investor confidence in renewable power projects. However, since we expanded the scope of this report this year to include corporate finance, we note a significant lending coming in from the US to companies engaged in coal power expansion in India” said Joe Athialy, Executive Director, Centre for Financial Accountability. Jefferies Financial Group, a US based financial institution, provided more than US$2 billion in underwriting services to JSW Energy and Adani in 2023. It’s the only US based financial institute to provide corporate finance to coal lined companies in India. “While Western countries have been dilly dallying on increasing climate finance for the developing world, its private sector seems to be lending to companies currently engaged in coal power expansion,” added Athialy.

The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy