Measures to Boost Renewable Energy

India’s renewable energy transition is not only a technological challenge, but equally a financial and institutional challenge. Therefore, the government has created specialised institutions and innovative financial instruments to mobilise long-term capital for green energy.

Indian Renewable Energy Development Agency (IREDA)

What is IREDA?

• Indian Renewable Energy Development Agency (IREDA) is a Mini Ratna (Category–I) Public Limited Government Company.
• It functions under the administrative control of the Ministry of New and Renewable Energy.
• Established in 1987 as a Non-Banking Financial Institution (NBFC).

Core Role

IREDA is the financial backbone of India’s renewable energy sector.
It provides financial assistance for:
→ Renewable energy projects
→ Energy efficiency
→ Energy conservation initiatives

Its guiding motto is “Energy for Ever”, indicating sustainability and continuity.

Objectives of IREDA

• Provide targeted financial support to projects generating electricity through renewable sources.
• Promote energy efficiency and conservation.
• Increase IREDA’s footprint in the renewable sector through innovative financing mechanisms.

👉 UPSC takeaway: IREDA reduces financing risk and improves bankability of renewable projects.

Green Bonds for Funding Renewables

Strengthened Regulatory Framework

• Securities and Exchange Board of India (SEBI) has expanded the scope of Green Debt Securities.
• New sub-categories introduced:
  • Blue Bonds
  • Yellow Bonds

This expansion aligns India’s framework with updated Green Bond Principles (GBP).

Types of Green Bonds

1. Blue Bonds

• Focus on:
  • Sustainable water management
  • Marine and maritime sectors
  • Sustainable fishing
• Used for oceans and water-related sustainability.

2. Yellow Bonds

• Dedicated to solar energy.
• Cover:
  • Solar power generation
  • Upstream and downstream solar industries

👉 Prelims-friendly point:
Blue = Water, Yellow = Solar

What are Green Bonds?

• Green Debt Securities are debt instruments issued to raise funds exclusively for environmentally sustainable projects.
• They connect capital markets with climate action.

Growth of Green Bonds in India

• Indian companies raised:
  • $1.4 billion (2020)
  • Nearly $7 billion (2021) through ESG and green bonds
• Many Indian issuers prefer offshore exchanges, finding them more attractive than domestic listings.

Why Are Green Bonds Needed?

Climate Finance Imperative

• According to the International Finance Corporation (IFC), part of the World Bank Group:
  • Climate change threatens agriculture, food security, water availability, and economies.
  • Enormous long-term capital is required to mitigate and adapt to climate risks.

Role of Green Bonds

• Bridge the gap between:
  • Environmental projects
  • Global capital markets
• Channel investments into:
  • Clean energy
  • Climate-resilient infrastructure
  • Sustainable development

Sovereign Green Bonds

What Are They?

• Sovereign green bonds are issued directly by governments to fund environmentally sustainable projects.

India’s Initiative

• Announced in Union Budget 2022–23.
• Issued as part of the government’s overall market borrowings.

Purpose

• Mobilise funds for:
  • Green infrastructure
  • Climate-friendly public investment
• Reduce the carbon intensity of the Indian economy.

👉 Mains-ready line:
Sovereign green bonds integrate climate goals into fiscal policy and public debt management.

Concluding Perspective:

India’s renewable energy push rests on three pillars: institutions like IREDA, financial innovation through green bonds, and sovereign commitment via budgetary instruments.

• IREDA → project-level financing
• Green bonds → market-based climate finance
• Sovereign green bonds → macro-level policy signalling

Together, they convert climate intent into capital flow, which is essential for achieving India’s renewable and net-zero ambitions.