As the country ‘s energy sector increases focus on renewable options, one of the main power finance companies, Rural Electrification Corporation (REC), expects its lending to the industry to grow significantly in the current financial year. “More than 10 per cent of our total lending this financial year would be in the renewable energy sector,” said P V Ramesh, chairman and managing director, REC.
In 2016-2017, eight per cent of the total lending activity was towards the non-conventional energy segment. As a percentage of the company’s total outstanding loans, renewable energy was four per cent. As on March 31, the company’s loan book was Rs 2.01 lakh crore. A larger chunk of the disbursements seen in the last financial year was also towards transmission and distribution. On lending to conventional energy like thermal, Ramesh added, “I do not expect thermal to disappear; however, it will take a backseat.” On the changing trend in lending to non-conventional sources of energy, he said, “Renewable lending momentum just started picking up in the last one year or so.”
REC is also expected to explore dollar-denominated green bond options to realise its bond-based fund-raising plans of Rs 55,000 crore for the current financial year. Green bonds are bonds which aim to make fund-raising attractive for environment-friendly projects. The company is also looking at formulating customised finance products to suit the needs of renewable projects. Ramesh added that these products would be customised largely to suit repayment schedules of such projects to ensure viability.
“Core drivers for renewable energy in India are energy security by reducing dependence on fossil fuels, electricity shortages and energy access for all,” the company said in its presentation. Ramesh added the company is bullish on the sector as it is rapidly changing and witnessing technology advancements. In its presentation, REC added the country has a total potential of 1,024.7 gigawatts in the renewable space, of which solar power would contribute more than 80 per cent.