The decline in finance for coal means that financial institutions are beginning to realize the risks associated with investing in coal. The decline in coal funding has been recorded for the second consecutive year. According to a recent report, 95 per cent of the loans given last year were for renewable energy projects and only 5 per cent were for coal power projects.
This fact was revealed in the Third Annual Coal vs. Renewable Financial Analysis 2019 report. According to the report, there has been a 126% decline in coal funding from commercial banks compared to 2018.
The report, prepared by the Center for Financial Accountability (CFA / CFA) and Climate Trends, is based on 50 project finance loan proposals for 43 coal-based and renewable energy projects in India.
The report states that there has also been a significant decline in state-owned financing of coal projects. There is also a significant decline in state-owned financing of coal projects. Lending for renewable energy projects saw a slight contraction of 6% YoY (year-on-year), although it received 95% of the total debt for energy projects.
CFA (CFA) Executive Director Joe Athiali said, “A significant decline in project finance for coal means that financial institutions are beginning to realize the financial and reputational risk associated with investing in coal. Our policymakers are on the wall The writing needs to be read. Pushing healthy commercial banks to finance uneven coal projects in India and abroad will only create more stress in the financial sector. “
In 2019, two coal projects (total capacity of 3.06GW) received 1100 crores (US $ 190 million) in project finance. In 2018, five coal-based projects with a combined capacity of 3.8GW received 6081 crore (US $ 850 million). In contrast, in 2017, 67 60,767 crore (US $ 9.35 billion) was lent to 17GW coal projects.
Of the total coal loan in 2019, 700 crore went towards refinancing of JSW (JSW) Energy’s Barmer Power Plant in Rajasthan. The Barmer project was also refinanced in 2018. Refinancing of projects is almost always to change term terms such as interest rates or maturity dates. JSW Energy is one of the progressive private power generation companies that announced a moratorium on the construction of new coal power plants and focused on expanding its renewable energy portfolio.
The remaining 400cr (US $ 91 million) went towards financing the new coal project of NTPC (NTPC) in Bihar floods. The engineering, procurement and construction responsibilities of the project have been awarded to Doosan Heavy Industries. NTPC (NTPC), India’s largest coal power operator, recently announced a moratorium on the construction of new greenfield coal power plants.
“Apart from private and publicly owned coal power companies, heavy industrial states like Gujarat and Maharashtra have also announced a‘ no coal ’(no coal coal) policy. These policies are being announced, due to the problem of excess coal, and also due to the decreasing cost of renewables. And this is clearly in the interest of India’s economic stability and developmental needs, ”said Aarti Khosla, Director, Climate Trends.
The 41 renewable energy projects (total capacity of 5.15GW) received a cumulative of ₹ 22,971 crore (US $ 3220 million). Lending to wind energy fell 30% compared to 2018, while solar lending increased by 10%. Solar dominated project finance debt for renewable energy in 2017, 2018 and 2019. However, financial stress in India’s power distribution companies (discoms) has affected investment in the renewable energy sector. DISCOMs owe the generation companies for ₹ 116,340 crore (US $ 16 billion), of which US $ 1.1 billion is owned by renewable energy generators.