India Opening the Door on Green Windows for Clean Energy

Co-authored with Poonam Sandhu, Financial Sector Specialist & India Head Consultant

In a key step toward institutionalizing catalytic clean energy finance, the Ministry of New and Renewable Energy Secretary Sh. Anand Kumar reiterated India’s commitment to opening the first Green Window in India at the World Sustainable Development Summit (WSDS) in New Delhi today. A new report, Growing Clean Energy Markets in India with Green Windows, released at the Summit describes the Green Window concept, how it works, and the potential market impact Green Windows can have in India.

A Green Window is a new unit, or group, within an existing financial institution, with access to a dedicated ring-fenced pool of low-cost capital, and exclusively designed to grow clean energy markets.

The Green Window approach positions public finance to activate greater private investment for mission-defined sectors by using strategies that include:

• risk mitigation,
• aggregation of small projects to diversify risk and to scale,
• strategic public-private co-investments,
• demonstration projects and market development activities.

Institutions with Green Windows would therefore transition from solely being financiers to mobilizers of investment.

NRDC and our partners were involved in development of the framework for Green Windows in 2018, starting with market assessment and stakeholder consultations. At the Climate Conference in Madrid in December 2019, MNRE had announced plans to implement the first Green Window in India hosted by the Indian Renewable Energy Development Agency (IREDA). IREDA, with support from knowledge partners NRDC and CEEW, is now developing an operational plan which includes the mission, the mandate, target market segments, performance metrics, and a roadmap for implementation of the Green Window.

The Green Windows concept, although developed locally in India, is based on the globally successful green investment bank model. Several national and sub-national governments including South Africa, United Kingdom, Australia, Japan, and the states of Connecticut and New York in the United States, have established green investment banks as publicly capitalized, domestically focused, specialist financial institutions, specifically established to attract private capital to investments in low-carbon climate resilient infrastructure including renewable energy.

India aims to achieve a five-fold increase in renewables to a whopping 450 GW by 2030. Availability of finance at appropriate terms, for all market segments, is one of the key factors influencing clean energy growth. Without policy initiatives that address risk perceptions of investors, financing may not keep pace with government targets and consumer demand. Institutional clean energy finance solutions, such as Green Windows, can have a transformative impact in catalyzing clean energy investment and spur market growth throughout the country.