Renewable energy companies face rising costs, technological upgrades, and policy uncertainty. Green finance in India provides a solution. The 2025 green credit line of ~US$462 million from Japan Bank for International Cooperation (JBIC) to India’s Power Finance Corporation shows the potential and necessity of green finance. This blog walks you through the process of obtaining renewable energy financing options for navigating risks and scaling sustainably.
Green finance refers to investments in environmentally sustainable projects aimed at reducing carbon emissions and combating climate change. It includes instruments like green bonds, concessional loans, and priority sector lending, and raising significant funds for renewable energy, energy efficiency, and sustainable agriculture. Green finance in India for renewable energy drives economic growth, ensures ecological balance and transparency to prevent greenwashing.
Business problems of renewable energy companies are hiccups in India’s energy transition dream of achieving 500GW non-fossil fuel power by 2030.
Restrictions to renewable energy projects’ development in India
How green finance changes the narrative for renewable energy financing options in India?
Green loans are regular bank loans assigned for environmentally sustainable projects such as solar farms, wind plants, or energy-efficient infrastructure. They are offered by public sector banks (like SBI, PNB), private banks (like HDFC, ICICI), and NBFCs.
Green bonds allow companies or projects to raise capital directly from debt markets, with proceeds assigned for green projects. India’s domestic green bond market saw issuances worth more than ₹131.42 billion in the first half of 2025. Corporates like Adani Green and ReNew Power have also raised capital via green bonds. There are two types of green bonds for renewable energy in India — Project bonds (secured by project cashflows) and Corporate green bonds (backed by balance sheets).
Loans where the interest rate is linked to the borrower’s achievement of predetermined sustainability (ESG) targets, like increasing renewable energy usage.
Example: If a company reduces its carbon intensity or improves renewable energy share beyond agreed KPIs, it gets a lower interest margin.
Sustainability-linked loans for renewable energy in India are popular among corporates wanting flexibility in use of proceeds, unlike green loans which are project-tied.
Specialised finance institutions play a big role in green finance in India for renewable energy:
Blended finance uses public or philanthropic concessional capital (like ADB, World Bank, GCF) to attract private investment for green finance in India for renewable energy projects.The World Bank provides financing at the high-risk stage, while public-sector bank steps in once risks are reduced.
Example: Asia Development Bank (ADB) partnered with GCF to introduce a $200 million green finance programme in India.
Once a renewable energy project is operational, developers can secure new debt at better terms from banks and NBFCs and issue bonds to raise capital. Refinancing optimises costs and improves cash flow. In March 2025, Adani Green Energy Ltd. refinanced a ₹92.53 billion construction loan from 2021, extending the repayment period by 19 years.
Lenders treat a well-documented DPR as the blueprint for underwriting.
A well-structured SPV gives confidence to banks, reduces their risk, and helps speed up approvals for project loans or bonds.
Show base & stress case DSCRs in financial metrics. Documents for green finance in India for renewable energy should include tenor, amortization schedule, interest rate assumptions, and covenant triggers. Strong, transparent modelling reduces pricing and shortens diligence.
Lenders consider such Power Purchase Agreements (PPAs) crucial because they provide financial stability and reduce investment risks. Prepare a bankable PPA with creditworthy off-taker or a well-structured PPA support mechanism. It assures lenders that project revenues are secure.Properly designed PPAs also help developers achieve better financing terms.
If your DPR, SPV documents, and PPA/permits are clean, getting green finance in India for renewable energy projects becomes easier.
Green finance in India for renewable energy projects helps companies raise capital to adopt clean energy like solar and wind power. Tools like green loans, green bonds, and special loans from IREDA and PFC make it easier to get long-term funding. Government programs and blended finance help reduce risk, so big projects are possible. Preparing clear project reports, ESG plans, and financial models helps get approvals faster. To learn more about these funding options, contact our experts for guidance.
Green finance in India refers to funding solutions that support projects that promote environmental sustainability. For example renewable energy projects financing. It includes green loans, green bonds, and sustainability-linked loans.
Options include green loans from banks and NBFCs, corporate and project green bonds, sustainability-linked loans, credit lines from IREDA and PFC, blended finance from multilateral agencies, and equity or project refinancing.
Developers must prepare a bankable DPR, ESG documentation, a financial model showing DSCR, and a well-structured SPV. Submitting these to public/private banks or NBFCs like IREDA improves chances of approval.
SLLs tie the interest rate of a loan to the borrower’s ESG performance. Meeting pre-agreed sustainability KPIs can reduce borrowing costs. SLLs give companies flexibility compared to project-specific green loans.
Key programs include IREDA term loans, refinancing lines, and PFC long-tenure project loans. Blended finance schemes with ADB, World Bank, or climate funds that reduce risk for private investors.
