Ireda's Global Ambitions in Green Energy Finance

In a world where renewable energy is more than a necessity, the Indian Renewable Energy Development Agency (Ireda) is taking bold steps to expand its footprint internationally. This is a strategic move to finance renewable energy projects through its GIFT City subsidiary, Ireda Global Green Energy Finance IFSC Ltd. This expansion aims not only to tap into global markets and international green funds but also to support India's green energy transition. Here’s a breakdown of how Ireda's initiatives are set to transform the renewable energy landscape.

GIFT City as Ireda's International Platform

Gujarat International Finance Tec-City (GIFT City) is the new hub for Ireda’s international ambitions. According to Pradip Kumar Das, Chairman and Managing Director of Ireda, the GIFT City subsidiary will cater to solar component manufacturing and green hydrogen businesses in India, targeting export-driven demand.

“We have already opened our GIFT City office, we need to operationalize it. When it starts, we will borrow from here and lend from here, without requiring foreign currency conversion,” Das explained. This setup will cut down borrowing costs for developers by eliminating hedging expenses.

This innovative approach ensures that developers with export-driven projects can borrow and repay in foreign currency, creating an efficient financial framework for international expansion.

Approaching Green Funds for Financing

To bolster its international expansion, Ireda plans to source funds from international green financing pools. By leveraging its GIFT City base, the company intends to borrow at reduced costs, making its renewable energy projects more competitive globally. This ambitious move is expected to enhance India’s position in the international renewable energy ecosystem.

Although Ireda Global Green Energy Finance IFSC Ltd has been operational since May this year, it is yet to complete its first transaction. However, discussions with multiple companies are ongoing, and tie-ups are anticipated in the near future.

A Broader Trend Among Public Sector Enterprises

Ireda’s move to GIFT City is part of a larger trend among public sector enterprises. For instance, Power Finance Corporation (PFC) has already established a subsidiary at the International Financial Services Centre (IFSC), and REC Ltd has received Reserve Bank of India (RBI) approval for a GIFT City subsidiary. These moves highlight the growing importance of the IFSC as a hub for global finance and investment in India’s infrastructure and energy sectors.

Ireda's Follow-on Public Offering (FPO) Plans

In addition to its international ambitions, Ireda is also preparing for a significant domestic financial boost. The company is awaiting approval from the Indian government for a follow-on public offering (FPO), expected to raise around ?4,500-5,000 crore. The company plans to issue fresh equity, which will dilute the government’s stake in the firm by up to 10%, pending government clearance.

“We will come to the market by the end of this year,” Das revealed, adding that the company is optimistic about raising more than its target of ?5,000 crore. This fundraising is crucial for Ireda as it positions itself to support India’s green energy transition, a goal echoed by its commitments at the RE Invest 2024 event.

Tax Exemption Request for Bonds

Ireda is also in advanced discussions with the Indian government to include its bonds under Section 54EC of the Income Tax Act. If approved, investors purchasing Ireda bonds will be exempt from capital gains tax, making these financial instruments significantly more attractive to potential investors. Das expressed hope that the approval would come through by mid-October, in time for the upcoming FPO.

A Pledge for Green Transition

As India accelerates its renewable energy ambitions, Ireda has pledged to increase its financial support for the green energy sector. By 2030, the company aims to finance an additional ?5 trillion worth of projects, having already backed nearly ?2 trillion worth of renewable energy ventures, resulting in a cumulative capacity of 27 GW.

Ireda’s portfolio primarily focuses on conventional renewable energy projects such as solar, wind, and hydro, which account for 58% of its financing. Emerging sectors such as CNG, ethanol, e-mobility, and charging infrastructure represent 18%, while the remaining 24% of funds have been allocated to state utilities for their renewable energy projects.

Reinforcing India's Renewable Energy Goals

Ireda’s strategic moves align perfectly with India’s broader renewable energy goals. The country aims to achieve 450 GW of renewable energy capacity by 2030, and agencies like Ireda are instrumental in turning this vision into reality. By expanding its operations internationally and securing necessary funds, Ireda is laying the groundwork for a robust and sustainable renewable energy infrastructure.

Sustainability at the Core

Sustainability remains at the core of Ireda’s mission. The agency is not just financing renewable projects but is also setting examples in sustainable practices. By focusing on green hydrogen and solar component manufacturing, Ireda is promoting technologies that have long-term benefits for the environment.

Future-Proofing Green Energy Financing

The establishment of Ireda Global Green Energy Finance IFSC Ltd signifies the agency’s commitment to future-proofing green energy financing. By tapping into international green funds and reducing borrowing costs for developers, Ireda is setting new standards in renewable energy financing. This approach will likely inspire other countries and organizations to adopt similar models, further accelerating the global shift towards renewable energy.

Engaging with Stakeholders

Ireda’s initiatives are also aimed at engaging with various stakeholders, including investors, developers, and policymakers. By offering attractive financial instruments like tax-exempt bonds and facilitating direct foreign currency loans, Ireda is creating a conducive environment for investments in renewable energy.

Conclusion

Ireda’s international expansion through its GIFT City subsidiary marks a significant milestone in its evolution as a leader in renewable energy finance. By tapping into global markets and securing international green funds, Ireda is not only supporting India’s green energy transition but also positioning itself as a key player in the global renewable energy landscape. With its ambitious plans and strategic initiatives, Ireda is poised to drive the future of green energy finance, both within India and beyond.

For those interested in learning more about Ireda's innovative approaches and strategic plans, stay tuned for further updates and detailed insights into the world of green energy finance. Together, we can pave the way for a sustainable and prosperous future.

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This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.