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The Asian Development Bank will provide a $100-million credit line to ICICI Bank to fund renewable energy and energy efficiency projects.
The central bank's board approved the sanction on Wednesday.
The credit will be available to projects identified by the ADB and ICICI Bank. This is taking into consideration Indian Government objectives and overall impact assessment, according to ADB.
The bank's support will help in developing renewable energy and energy efficiency in priority sectors. It will also catalyse local commercial bank financing to support the development of smaller and medium-size renewable energy and energy efficiency projects that are too small for ADB to support on a project-by-project basis.
The credit line will fill a market gap in terms of financing such projects. This is in light of the recent global financial crisis and the resulting limitation on funding sources. It will also achieve energy savings contributing to reducing India's energy supply-demand gap and mitigating climate change, the central bank said.
Against an estimated 80,000 MW renewable energy-based grid connected power generation potential in the country, about 6,000 MW installed capacity has been realised. This is an opportunity to exploit renewable energy sources.
The renewable energy constitutes 5 per cent of the total installed power generation capacity in the country. The target is to achieve up to 10 per cent of additional installed capacity to be set up till 2012 to come from renewable energy sources, according to Indian Renewable Energy Development Agency Ltd.
The promotion of renewable energy and energy efficiency are key objectives under ADB's Strategy 2020, ADB's Country Partnership Strategy for India and ADB's private sector operations.
Starting in 2013, ADB's annual target for clean energy investments will double to $2 billion. This will accelerate low-carbon growth and reduce greenhouse gas in the region, the bank said.
raja@thehindu.co.in
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