Kreditanstalt für Wiederaufbau (KfW), the German development bank, has extended a €130 million loan to the Indian Ministry of Finance and a €70 million loan to the State Bank of India (SBI) to expand India’s solar capacity. This move aims to fortify solar energy generation in India, a collaboration that expanded under the Indo-German solar partnership initiated in 2017.
Kreditanstalt für Wiederaufbau (KfW) is a German government-owned development bank that specializes in financing projects that promote economic, social, and ecological advancement. It supports various sectors, including infrastructure, environmental protection, education, and SMEs, fostering sustainable development. KfW provides low-interest loans, grants, and financial aid to support Germany’s economy and global development initiatives.
The State Bank of India will channel its allocated funds towards refinancing solar projects, totaling a capacity of 180 MW in Phase III. Meanwhile, the Ministry of Finance’s disbursement to the power generation company of Maharashtra will assist ground-mounted solar systems, amounting to 330 MW, and fortify transmission lines linking solar projects to the nearest substation.
Christiane Laibach, Member of the Executive Board of KfW Group, highlighted the pivotal role of this investment: “KfW is helping India to expand its solar energy infrastructure with the aim of meeting the country’s rapidly-increasing demand through renewable energies as much as possible. The demand for energy and electricity is increasing due to economic and population growth, urbanisation, industrialisation and electrification. We wish to support India – as the third largest producer and second largest consumer of electrical energy in the world – in contributing to a broadly effective, technically and economically efficient, and socially and environmentally sustainable energy supply.”
The culmination of these two new loan agreements is projected to reduce India’s greenhouse gas emissions by an estimated 650,000 tons, marking a crucial step towards environmental sustainability. This collaboration has already yielded impressive results, with 4 GW of power generation capacity installed and approximately 5 million individuals receiving electricity sourced from renewable energy, illustrating the tangible impact of the German-Indian solar partnership. The initiatives supported by KfW under the German-Indian solar partnership have resulted in significant outcomes: 4 GW of capacity has been established, providing renewable energy to 5 million people. This accomplishment translates to an annual reduction of approximately 6 million tons of CO2 emissions throughout India.
This latest financial infusion by KfW, coupled with previous investments amounting to nearly €1 billion, showcases a concerted effort to propel India towards a greener and more sustainable energy future. In a separate endeavor earlier this month, REC Limited secured a €200 million loan agreement with KfW, aimed at revitalizing India’s distribution companies, further exemplifying the ongoing mission to reform and fortify India’s energy sector.