Clean Energy Finance and Investment Roadmap of India

Executive Summary

Roadmap action plan

This Clean Energy Finance and Investment Roadmap for India outlines critical actions to help unlock finance and investment for three clean energy areas, namely energy efficiency measures with a focus on micro, small and medium enterprises (MSMEs), offshore wind and green hydrogen. The following actions highlight key steps to engage stakeholders and build an enabling environment for investments in clean energy. It also identifies financing mechanisms to support market creation and development for these three areas that can unlock barriers to mobilising capital from domestic and international financial institutions.

Energy efficiency finance with a focus on micro, small and medium enterprises

Table 1. Main recommendations for Energy Efficiency development in MSMEs

Project cycle stage	Recommendations / Mechanisms	Category	Major risks or barriers addressed	Timeline	Leadership role
Technology upgradation	Set clear policy signals and develop further incentives to seek energy efficiency	Enabling	MSME lack of incentive to adopt energy efficiency measures	Short-term	MoMSME; BEE
Facilitating finance	Implement direct interest subsidies to MSMEs for energy-efficient technology upgradations	Financial	MSME challenges with high cost of finance	Short-term	BEE
Cross-cutting	Use the Energy Efficiency Finance Platform (EEFP) as a one-stop shop for data, informational tools and knowledge products	Enabling	MSME lack of awareness; MSME lack of technology/service providers; Financial institutions lack of data	Short-term to Mid-term	BEE (with international partners)
	Training and capacity building under EEFP to pool and coordinate efforts	Enabling	MSME and financial institutions’ lack of awareness and capacity to carry out energy efficiency finance and investments	Mid-term to Long-term	BEE (with international partners)
	Energy savings insurance product and complementary measures for energy services market development	Financial	MSME lack of confidence in ESCO market; Financial institutions lack of capacity; Financial institutions high default risk perception	Short-term to Long-term	SIDBI (with international partners)
	Improved flexibility and efficacy of existing credit guarantees and lowered guarantee costs	Financial	MSME lack of collateral / guarantees; MSME inability to afford high cost of available finance and / or credit guarantees; Financial institutions high default risk perception	Short-term	SIDBI, SBI, private sector banks
Supplying finance	Develop a pilot targeted foreign exchange hedging facility providing concessional hedging products	Financial	International lenders’ hedging costs	Mid-term to Long-term	SIDBI (with international partners)

Note: BEE: Bureau of Energy Efficiency; MoMSME: Ministry of Micro, Small and Medium Enterprises; ESCO: Energy Service Company; SIDBI: Small Industries Development Bank of India.

Enabling investment in offshore wind development

Table 2. Main recommendations for Offshore Wind

Project cycle stage	Recommendations / Mechanisms	Category	Major risks or barriers addressed	Timeline	Leadership role
Equipment and supply chains	Enable early domestic manufacturing capacity via export credits, tax relief, concessional finance or Production Linked Incentives (PLI) scheme	Financial	Lack of domestic manufacturing capacity	Short-mid term	MNRE; MoF; MoCI; foreign Export Credit Agencies
Logistics and related infrastructure	Build a long-term infrastructure plan to support offshore wind capacity additions and track the investment within the National Infrastructure Pipeline.	Enabling	Required support infrastructure	Short-mid term	MNRE; State transmission authorities; Port authorities
Operations and maintenance	Assess role of InvITs to recycle capital from operating units	Enabling	High capital requirements	Mid-term	MNRE; MoF; NIIF
Cross-cutting (Facilitating Finance)	Design and implement the Viability Gap Fund (VGF) scheme and clarify the amount and volumes in the Strategic Paper for Establishment of Offshore Wind Energy.	Financial	High capital requirements	Short-term	MNRE; MoF
	Set up a blended finance facility to facilitate investment	Financial	High capital requirement; Lack of co-ordination across actors	Short-term	MNRE (IREDA); NIIF; International organisations and donors such as MDBs

Note: The Strategic Paper for Establishment of Offshore Wind Energy already provides several clarifications. InvITs: Infrastructure Investment Trust; IREDA: Indian Renewable Energy Development Agency; MDB: Multilateral Development Banks; MoF: Ministry of Finance; MNRE: Ministry of New and Renewable Energy; MoCI: Ministry of Commerce and Industry; NIIF: National Investment and Infrastructure Fund

Enabling investment in green hydrogen development

Table 3. Main recommendations for Green Hydrogen

Value Chain stage	Recommendations / Mechanisms	Category	Major risks or barriers addressed	Timeline	Leadership role
Upstream Resources (Renewable Energy)	Design renewable energy auctions dedicated to Green Hydrogen and Green Ammonia producers	Enabling	Input cost of electricity	Short-mid term	MNRE (SECI)
Electrolysers	Extend production linked incentives for domestic manufacturing.	Financial	Lack of domestic manufacturing capacity	Short-term	MoF / MNRE / MoCI
Hydrogen Production - Electrolysis	Explore credit enhancement mechanisms (e.g., Viability Gap Funding)	Financial	High capital requirements	Short-mid term	MoF / MNRE (IREDA)
	Develop mechanisms to reduce offtake and revenue risks (e.g., green mandates coupled with CfD or double auction process)	Financial	Offtake risk Revenue volatility	Short-term	MNRE; Design with international partners
Transport & Storage	Include green hydrogen infrastructures under the Harmonized Master List of Infrastructure Sub-sectors; and in the National Infrastructure Pipeline	Enabling	Required support infrastructures	Short-mid term	MoF
Cross-cutting	Create a blended finance facility to de-risk and mobilise private capital	Financial	High capital requirements; Lack of co-ordination across actors	Short-mid term	MoF / MNRE / MDBs (e.g., ADB, World Bank)
	Define a sustainable finance taxonomy1)	Enabling	Lack of recognition of environmentally sustainable investments	Short-term	MoF
	Define green hydrogen standards and implement a certification and tracking scheme	Enabling	Lack of green hydrogen standards	Short-mid term	MNRE / international organisations
Design a pipeline of GW-scale green hydrogen hubs	Enabling	Policy mid/long-term clarity	Short-mid term	Public-Private taskforce

Note: This recommendation would apply beyond green hydrogen and could also support investment in offshore wind or energy efficiency. It is particularly salient for green hydrogen, as it is a nascent product without any consensual definition. ADB: Asian Development Bank; IREDA: Indian Renewable Energy Development Agency; MDBs: Multilateral Development Banks; MoF: Ministry of Finance; MNRE: Ministry of New and Renewable Energy; MoCI: Ministry of Commerce and Industry; NIIF: National Investment and Infrastructure Fund; SECI: Solar Energy Corporation of India.