Financing India’s Energy Transition Through International Bond Markets


This study analyses green bonds issued by Indian RE developers in international markets since the first issuance in 2014 to the first half of 2021. Bonds issued for financing or refinancing RE assets typically carry third-party certification as ‘green’ bonds. With funds availability with domestic lenders proving a bottleneck for RE projects, developers must fully utilise all available routes to accelerate fundraising and project deployment. Green bonds can play a vital role in this process. The study analyses key characteristics of the bonds, such as pricing, geographic allocation, and maturity periods. Further, it does a deep dive into the portfolio refinanced by green bonds and explores the technologies, offtakers, and project profiles for this portfolio.

Green bonds come under the wider ambit of ESG bonds

Source: CEEW-CEF compilation

Key highlights

  • Indian developers have raised over USD 11 billion through green bonds in international bond markets between 2014 and the first half of 2021. The first 6 months of 2021 saw $3.6 billion raised, which was higher than any previous 12-month period.
  • 8 developers have raised green bonds in international markets, with Greenko and ReNew Power making up almost 70 per cent of all such issuances. The first 6 months of 2021 saw 3 developers (Continuum Green Energy, Hero Future Energies, JSW Hydro) make their debut issuances, while NTPC, Azure Power, and Adani Green Energy have issued green bonds prior to 2021.

Cumulative value of green bonds issued by developers

Source: CEEW-CEF compilation
  • Green bonds raised in international markets by Indian developers have been oversubscribed by 3.6 times on average. Asian investors have led this market interest, picking up 48% of bond proceeds.
  • These bonds have refinanced at least 10 GW of RE capacity in India. Wind and solar make up 42% each of this number, totaling to 8.4 GW. Hydro makes up the balance. In effect, green bonds have refinanced 10% of India's total wind and solar capacity.
  • Projects with state utilities make up over 60% of bond portfolios. The risk of payment delays has not dampened market interest in Indian green bonds. Developers diversify their portfolio across multiple utilities to minimise risks. International markets have also been conducive to bonds with short to moderate operational histories.

Way forward

Developers with strong financial credentials have received strong backing from international bond markets. While green bond issuances have so far been concentrated in large-scale developers, we recommend that developers not at gigawatt scale also seriously evaluate this route. Further, upstream ‘green’ industries, such as RE manufacturing, and industries looking to go green can also leverage the route to access debt capital. Finally, policymakers must take lessons from the success of Indian developers in international bond markets to revitalise the domestic green bond market.

    August 2021 | Report
    Shreyas Garg, Rishabh Jain, Gagan Sidhu
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