Loan Deal Close for India's $16 Billion Energy Saving Market

A PILOT programme for financing energy-saving projects set up by Europe’s biggest bank, HSBC Holdings Plc, is near to completing it’s first loan deal into India’s $16 billion energy-saving market.

Stuart Davis, chief executive officer of HSBC’s Indian operations, said in an interview in Mumbai with Bloomberg:

“We’re optimistic that we can close our first deal soon. The first one is important because the real benefits will only come when you have the model working and it becomes scalable.”

India’s Bureau of Energy Efficiency (BEE) and the London based bank are developing a programme to help Indian companies finance their initial investments in energy saving, with the loans repaid from the money saved from lower utility bills.

After China, India is Asia’s fastest growing major economy but suffers from a 10.5 percent energy shortfall during peak hours that twill hinder growth. The BEE estimates that India can avoid having to invest in 19,000 MW generation capacity, which it needs to install to 2012 to reach current targets, by having industries shift to technologies that save energy.

Davis said, “The big challenge is getting an understanding of the risks and learning how to monetize the cost-savings.” If the programme is successful, the opportunities to finance similar projects are “almost endless,” he told Bloomberg.

Ajay Mathur, the director general of BEE, said earlier this year that the Indian market for energy-efficiency products and services could be worth 740 billion rupees ($16 billion).

India plans to impose efficiency targets across nine industries, including cement, power and paper, and allow companies to meet their targets, starting next year, by trading energy-saving certificates.

Bloomberg explained that India’s current installed power generation capacity is 167,278 megawatts, according to the Central Electricity Authority. The government has pledged to provide electricity nationwide by 2012 and needs to increase capacity to 200,000 megawatts to sustain economic growth, according to the power ministry.

Picture by openDemocracy

Thursday 25th November 2010

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