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India Secures $1.7 Billion World Bank Loan to Boost Renewable Energy Development

published: 2023-07-03 15:14

India has secured a loan of $1.7 billion from the World Bank to accelerate the development of renewable energy in the country. The loan includes $200 million allocated to Himachal Pradesh, aimed at adding 10 GW of additional renewable energy capacity by 2030. The remaining $1.5 billion will be used by the federal government to scale up low-carbon energy investments, stimulate climate finance, and develop green hydrogen.

Himachal Pradesh, which currently meets over 80% of its energy needs from hydropower, is striving to achieve 100% green energy by 2030. With the World Bank loan, the state plans to diversify its renewable energy sources and add 10 GW to its power supply. Solar energy is expected to contribute around 150 MW to this goal.

The $200 million loan, provided by the World Bank Group's International Bank for Reconstruction and Development (IBRD), will support Himachal Pradesh's vision of becoming a leading "Green State." Surbhi Goyal and Pyush Dogra, Team Leaders for the bank's Himachal Pradesh Power Sector Development Program, expressed confidence that the loan would contribute to the state's ambitions.

Simultaneously, the World Bank has approved $1.5 billion for the Indian government to advance low-carbon energy initiatives. This funding will scale up renewable energy, stimulate private financing in the climate sector, and help India reach its target of 500 GW non-fossil fuel capacity by 2030. The loan consists of $1.44 billion from the IBRD, complemented by $1 billion facilitated by the United Kingdom, and includes a $56.57 million credit from the International Development Association (IDA).

Under the First Low-Carbon Energy Programmatic Development Policy Operation, the World Bank's loan will stimulate the adoption of green hydrogen, address funding gaps, mitigate risks, enhance renewable energy grid integration, and drive demand for renewable energy. It will also support policies for a national carbon credit trading scheme, the launch of a national carbon market, and the issuance of $6 billion in sovereign green bonds by 2026.

Auguste Tano Kouame, the World Bank Country Director for India, highlighted that the program would play a crucial role in supporting the National Green Hydrogen Mission, which aims to attract $100 billion in private sector investments by 2030.

This loan from the World Bank marks another milestone in its ongoing support for India's renewable energy goals. Over the years, the bank has been actively promoting solar growth in the country and, in 2022, approved $165 million to support the installation of 450 MW of residential rooftop photovoltaic systems.

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