With an increased awareness about importance of green energy and lessing the carbon footprint, banks like Small Industries Development Bank of India (Sidbi), HSBC India and Power Finance Corp. Ltd have registered with the Bureau of Energy Efficiency (BEE) for its energy efficiency financing platform.
The platform is meant to create a mechanism that allows mainstream financing of energy efficiency projects by providing instruments such as bankable project reports and other risk-mitigation measures to enhance comfort for lenders towards these projects.
Such projects and energy service companies often find it hard to source funding, according to BEE secretary Saurabh Kumar.
“Essentially, banks have a high risk perception about such unsecure lending. More than a mindset, it requires a skill-set to understand such project reports, which is missing,” said Kumar. “But just to give you a signal on how this is gaining importance, last year the Japan International Cooperation Agency loaned Rs1,500 crore to Sidbi exclusively for energy efficiency in the small and medium enterprise sector.”
BEE has estimated the near- and medium-term energy efficiency market potential to be around Rs74,000 crore, with investments in such programmes recouped in less than five years while increasing productivity.
Energy service firms provide solutions for improved energy efficiency in buildings, utilities and offices, with profits tied to the savings achieved.
Coupled with Green Ratings which have been launched by SMERA in India, this will give a major boost to green projects in India. With SMEs comprising a major chunk of manufacturing space in India, it can help to make the industry greener.
The perform, achieve and trade scheme will make a huge difference in the business of energy service firms as well as small and medium enterprises, according to V. Raghuraman, principal adviser at industry lobby group Confederation of Indian Industry, and chairman of the World Energy Efficiency Association.
