Lok Sabha Question No. 3022 (UNSTARRED), answered on 2025-03-19
Subject: Benefits of Renewable Energy Financing Obligation
Ministry: NEW AND RENEWABLE ENERGY
Asked by: Shri Pratap Chandra Sarangi, Shri Jaswantsinh Sumanbhai Bhabhor, Shri Captain Brijesh Chowta

## GOVERNMENT OF INDIA MINISTRY OF NEW AND RENEWABLE ENERGY

## LOK SABHA UNSTARRED QUESTION NO. 3022

ANSWERED ON 19/03/2025

## BENEFITS OF RENEWABLE ENERGY FINANCING OBLIGATION

## 3022. SHRI CAPTAIN BRIJESH CHOWTA SHRI JASWANTSINH SUMANBHAI BHABHOR SHRI PRATAP CHANDRA SARANGI

Will the Minster of New and Renewable Energy be pleased to state:

- (a) the estimated financial impact and potential benefits of Renewable Energy Financing Obligation (REFO) on India's renewable energy growth;
- (b) whether the Government has consulted financial institutions and stakeholders on simplifying financing processes for renewable energy projects particularly roof top solar and if so, the details thereof;
- (c) the measures taken to ensure flexible lending terms and green investment prioritization;
- (d) whether the government has reviewed the effectiveness of Renewable Purchase obligations (RPOs) and similar mandates before proposing REFO; and if so, the details thereof; and
- (e) whether the government has any specific initiatives to encourage rooftop solar adoption in coastal and industrial regions like Dakshina Kannada, where solar potential is significant and if so, the details thereof?

## ANSWER

## THE MINISTER OF  STATE  FOR NEW & RENEWABLE ENERGY AND POWER (SHRI SHRIPAD YESSO NAIK)

(a) Renewable Energy Financing Obligation (REFO) is expected to create a dedicated financial ecosystem  for  renewable  energy  projects,  ensuring  consistent  capital  flow  to  accelerate deployment as required for meeting Nationally Determined Contributions (NDC) and Net-Zero targets of the Country. Broadly, REFO mechanism is likely to address the following:

- Bridging the funding gap for achieving 500 GW of non-fossil fuel-based capacity by 2030, requiring an estimated ₹30 lakh crore investment.
- Encouraging financial institutions to allocate resources for renewable energy projects, reducing dependency on conventional sources.
- Enhancing  India's  energy  security  and  reduce  import  dependency  by  promoting domestic renewable energy generation.
- Lowering  electricity  costs  in  the  long  run  by  driving  down  financing  costs  and improving economies of scale in green energy projects.

(b) & (c) Yes, MNRE has been actively engaged with financial institutions and stakeholders, to streamline renewable energy financing, and flexible loan terms.

Some of the initiatives of MNRE in this respect are as under:

- Organizing  workshops  on  Mobilizing  Finance  for  Renewable  Energy,  where  major banks and NBFCs are called to discuss financing challenges and solutions.
- Direct  consultations  with  banks  and  industry  leaders,  urging  them  to  simplify  loan processing.
- Encouraging green financing instruments, such as green bonds and concessional loans, to make funding more accessible.
- Regular discussions with other Ministries/departments and RBI to enhance regulatory support for renewable energy financing, ensuring priority sector lending benefits are extended to more green projects, etc.

Also, IREDA, a financial institution under MNRE, has been actively financing RE projects. IREDA has launched a dedicated Retail Division targeting the Business-to-Customer segment. The entire loan application process at IREDA is digitized with simplified processes.

(d) The compliance of Renewable Purchase obligation (RPO) requires availability of renewable power at affordable cost. The cost of financing is a major component in generating renewable power  at  competitive  rates  by  the  RE  developers.  Accordingly,  Ministry  has  suggested Department of Financial Services (DFS), to consider mandating REFO.

(e) To encourage adoption of rooftop solar in the country including in the coastal and industrial regions like Dakshina Kannada, Government of India has launched PM Surya Ghar: Muft Bijli Yojana. The scheme aims to increase the share of solar rooftop capacity in the country and empower residential households to generate their own electricity. The scheme has a target to install rooftop solar for one crore households in the residential sector with an outlay of ₹ 75,021 crore and is to be implemented till FY 2026-27.

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