IFC invests US$125 million in Indian clean energy company

13th January 2017 Jack Aldane

IFC, the private sector branch of the World Bank Group, is lining up an equity stake in Indian business house Hero Group’s renewable energies arm Hero Future Energies.

The corporation’s US$125 million investment draws partially on its US$1.2 billion Global Infrastructure Fund with the aim of boosting Hero’s renewable energy capacity, creating jobs and stimulating the support of institutional investors worldwide for further development of clean fuel for Indian homes and industries.

Rahul Munjal, chairman and managing director of Hero Future Energies, said the company’s decision to “join hands with IFC” rests on its goal of reaching 2.7 gigawatts (GW) of renewable energy capacity by 2020, raising the bar from the company’s current 360 megawatt solar and wind capacity across 12 Indian states.

More than 40 percent of India’s 1.2 billion people cannot access reliable sources of electricity. According to India’s Power Minister Piyush Goyal, around US$250 billion has been needed to fill the country’s energy gap since 2014, most of which will need to be sourced from the private sector. The Indian government’s plans to establish 175 GW of solar and wind energy generating systems by 2022 could relieve the country of its current dependence on thermal energy, accounting for 80 percent of its total supply.

Sunil Jain, CEO of Hero Future Energies, also said the firm would “aggressively focus” on its rooftop solar portfolio in the coming 12 months. One of Hero Future Energies near-term goals is to build greenfield solar and wind plants with a total of 1 GW capacity throughout India by the end of 2017. Jain added that business opportunities for India’s domestic as well as overseas markets are likely to proliferate with the growth of technologies in storage and hybrid projects.

India’s central state of Madhya Pradesh is currently host to the world’s largest solar plant on a single site. The plant, for which IFC raised US$750 million in private investments in 2016, has a capacity of 750 megawatts (MW), enough to power more than 120,000 homes.

IFC commitments to India stand at around US$5 billion from the time of 30 June 2016. The corporation had increased its commitments by US$1.1 billion by the end of the year, saying in a report that it plans to focus on infrastructure and financial inclusion across India to increased private capital and create an environment for public-private partnerships.

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