Debt financing has emerged as a critical enabler of renewable energy growth in India, with both domestic and global investors increasingly opting for structured debt solutions. This signifies growing confidence in the long-term viability of the sector, as well as the strengthening of financial fundamentals among Indian renewable energy developers. Over the past three months (January-March 2025), Indian renewable players and financial institutions have collectively secured approximately Rs 503.073 billion in debt financing and loans, as tracked by Renewable Watch Research.
This influx of capital in the Indian renewable energy market indicates a strengthening of the funding landscape, where financial institutions are increasingly willing to extend long-term credit to renewable energy developers. Moreover, the increasing reliance on debt highlights a maturing investment climate, where lenders provide long-term financing with tailored repayment structures, aligning with the cash flow cycles of renewable assets.
Renewable Watch provides a round-up of key debt financing deals, challenges, strategies to strengthen financial frameworks, and insights on how structured financing will shape the sector in the coming decade…
Key developments in debt financing
Debt financing for renewable energy expansion
In January 2025, the Avaada Group announced that they had raised Rs 86.43 billion across nine renewable projects, spanning solar IPP, agrivoltaic projects under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan scheme, commercial and industrial solar projects, and solar manufacturing. Financing was carried out through multiple transactions involving a diverse group of lenders, including public sector banks such as the State Bank of India and Union Bank, public sector financial institutions such as National Bank for Financing Infrastructure and Development (NaBFID) and PFC Limited, and private sector/multinational banks and institutions, such as Standard Chartered, Axis Bank, Yes Bank, Tata Capital, Aseem Infra, and the National Investment and Infrastructure Fund. The diversity of Avaada’s funding demonstrates how debt is not limited to energy generation but extends to upstream activities like module manufacturing. It also demonstrates the ability of private players to structure and execute the financing of diverse renewable energy projects at scale.
Ecozen, in January 2025, announced the raising of over $23 million in debt funding from responsAbility Investments, Northern Arc Capital, and Maanaveeya Development and Finance Private Limited. The funds will be used to scale Ecozen’s flagship solutions, including Ecotron, Ecofrost and advanced motor control systems, as well as expand operations within India and internationally. Sunsure Energy, in the same month, announced that it had secured Rs 4.16 billion in long-term debt financing from Aseem Infrastructure Finance Limited to develop a 150 MW open access solar park in Solapur, Maharashtra. In February 2025, it announced that it had secured another Rs 1.29 billion in long-term debt financing from Tata Capital and Aditya Birla Finance, which will be used for the construction of its 49 MW open access solar plant in Augasi, Uttar Pradesh. This financing will further support Sunsure’s 145 MWp portfolio of solar open access projects in the state.
Juniper Green Energy announced in February 2025 that it had secured Rs 87.443 billion in phased debt financing over the past few months from key financial institutions, including PFC Limited, DBS Bank, HSBC Bank and Indian Renewable Energy Development Agency Limited (IREDA). The funding will be instrumental in the development of wind-solar hybrid and firm and despatchable renewable energy projects, signalling a clear trend where large-scale renewable developers are tapping into debt to enhance their capacity rather than relying on dilutive equity funding. Similarly, KPI Green Energy, in March 2025, secured a Rs 2.72 billion loan from NaBFID, to partly finance a 50 MW wind-solar hybrid power project in Bharuch, Gujarat.
On the refinancing side, Adani Green Energy Limited announced in March 2025 that it had refinanced a Rs 92.53 billion construction loan taken in 2021, extending the repayment period to 19 years. This refinancing of loans not only optimises costs but also aligns debt maturity with project cash flows, ensuring financial sustainability. The move demonstrates that big developers in the renewable energy space are prioritising long-term, stable financing mechanisms over short-term debt cycles.
Role of NCDs
Non-convertible debentures (NCDs) have become a preferred instrument for raising capital in the renewables sector. JSW Energy, for instance, announced the issuance of NCDs worth Rs 12 billion as part of a larger plan to raise Rs 30 billion in March 2025. The issuance of 120,000 unsecured, rated, taxed and redeemable NCDs, each with a face value of Rs 100,000, has been structured into two tranches with distinct tenors and interests rates. Similarly, in the same month, SWELECT Energy System Limited raised Rs 2.9 billion through NCDs with India Infradebt Limited, involving Rs 2.6 billion in cash collaterals. SWELECT plans to use these funds to expand its IPP portfolio to 1 GW by 2026-27. The success of these issuances indicates that alternative funding routes are gaining traction among developers beyond traditional bank loans.
Debt financing for T&D infrastructure
Beyond power generation, debt financing is playing a crucial role in funding the development of transmission infrastructure and grid enhancements. Sterlite Grid 32 Limited, in January 2025, secured Rs 24.5 billion in refinancing through listed NCDs for its Mumbai Urja Transmission Limited project, supporting the evacuation of over 20 GW of renewable energy from Rajasthan. The NCDs were subscribed by NaBFID and India Infrastructure Finance Company Limited.
Similarly, in the same month, GMR Smart Electricity Distribution Private Limited, a subsidiary of GMR Power and Urban Infra Limited, received a Rs 21.28 billion loan from IREDA to finance the installation of 7.57 million smart meters in Uttar Pradesh. Power Grid Corporation of India Limited also secured a Rs 17.15 billion green loan from Sumitomo Mitsui Banking Corporation, with an additional greenshoe option of Rs 12.86 billion. The funds will be utilised to support renewable energy projects, improve grid reliability and advance sustainable development initiatives across India. These developments underscore the growing interest of investors in improving the country’s transmission and distribution (T&D) infrastructure to accommodate the rising influx of renewable energy for more reliable power supply.
Role of public sector and international financial institutions
Public sector financial institutions continue to play a vital role in India’s renewable debt ecosystem. The Indian Railway Finance Corporation (IRFC) extended a Rs 75 billion loan to NTPC Green Energy Limited, further demonstrating that securing such debt financing is becoming common among public sector undertakings involved in renewable energy development. With this initiative, IRFC joins a group of public sector financial institutions, including PFC, REC Limited and IREDA, in supporting the renewable energy sector.
International lenders have shown a preference for public developers in the Indian renewable energy space, especially considering the government’s intent to promote clean energy development in the country. To this end, in January 2025, PFC, in partnership with the Japan Bank for International Cooperation, secured a Rs 65 billion loan for renewable energy financing, with Rs 40.04 billion from various other commercial banks. The loan offers a long tenor of up to 20 years, and will be used by PFC to finance renewable energy projects.
Additionally, in February 2025, the Small Industries Development Bank of India (SIDBI) and Agence Française de Développement signed a Rs 8.68 billion credit line agreement to support green financing for micro, small and medium enterprises (MSMEs). SIDBI will utilise this funding to provide MSMEs with access to financing for energy-efficient technologies and renewable energy solutions, ensuring that even small-scale renewable projects gain access to affordable capital, enabling decentralised renewable deployment.
Outlook
The increasing reliance on debt financing reflects the confidence of both domestic and international investors in India’s renewable energy sector. The inclination towards debt financing has several implications for the country’s transition to clean energy. First, it enables faster project execution, as developers can access substantial capital without diluting ownership. This is crucial for meeting renewable energy targets within the stipulated timelines. Second, the increasing adoption of debt financing reflects improved financial discipline among developers, allowing them to manage long-term liabilities effectively and ensuring project bankability.
Despite the increasing role of debt in renewable financing, several challenges remain. Expected equity returns for renewable projects are facing pressure due to payment delays from discoms, generation underperformance and rising costs. The depreciation of the rupee might pose an added risk for projects with foreign currency debt exposure, potentially increasing repayment costs. Banks also face sectoral exposure limits and provisioning norms for non-performing assets, which constrain lending to renewables, especially as they are often classified alongside conventional power. Additionally, rising interest rates in India could increase borrowing costs for developers, making it essential to negotiate favourable terms and explore innovative financing solutions.
In order to mobilise greater capital for India’s renewables sector, it is crucial to improve the financial health of discoms. Discoms are the primary offtakers of renewable energy, and addressing their liquidity constraints will reduce payment delays and boost lender confidence. Additionally, resolving bottlenecks in land acquisition and transmission infrastructure is necessary to prevent project delays. Government interventions, such as single-window clearances and land banks, could streamline the approval process for renewable projects.
Expanding India’s corporate bond market can also provide renewable developers with lower-cost financing compared to bank loans. By deepening domestic bond markets, developers can access more stable and predictable financing. Risk mitigation strategies, such as partial credit guarantees and blended finance from development banks, can help attract private capital for emerging technologies such as energy storage and offshore wind. Additionally, creating dedicated financing vehicles such as green banks and strategic funds can help lower capital costs for developers and channel more domestic capital into renewable projects. Encouraging foreign investment through more flexible external commercial borrowing norms and clearer hedging guidelines can help India tap into global capital pools. Improving regulatory frameworks for infrastructure investment trusts can facilitate capital recycling from operational projects, freeing up liquidity for new developments.
As India progresses towards its ambitious clean energy targets, debt financing will remain a crucial pillar of its renewable energy growth strategy.
