With the cooperation of the Packard, MacArthur, and Hewlett foundations and the Grantham Foundation for the Protection of the Environment (formerly the Jeremy & Hannelore Grantham Environmental Trust), the White House has announced two climate finance initiatives in India.
Announced during Indian prime minister Narendra Modi's state visit to the U.S., the solar energy initiatives will receive a total of $30 million from the four foundations, to be matched by the government of India.
The first of the two, the U.S.-India Clean Energy Finance initiative, aims to raise up to $20 million to make solar power projects "finance ready." To that end, funds raised through the initiative will support feasibility studies, project finance documentation, land surveys, and customer due diligence procedures, which are required to meet the requirements for financial support from the Overseas Private Investment Corporation, the U.S. government's development finance institution. The initiative is expected to leverage an estimated $400 million from OPIC and other investors in support of efforts to deploy distributed solar energy for grid-tied communities, off-grid communities, and those served by mini-grids. Mini-grids — renewable energy-based electricity generators designed to serve remote villages — are a major component of Modi's plan to provide electricity to all Indians by 2019.
The second initiative, the U.S.-India Catalytic Solar Finance Program, aims to secure up to $40 million in capital in support of investments in India's solar energy market, with a focus on the off-grid and solar rooftop markets. The flexible capital raised through the initiative is expected to leverage up to $1 billion in commercially oriented capital for new, innovative, and high-impact projects. Together, the two initiatives are expected to mobilize up to $1.4 billion in climate finance.
Mini-grids raise challenges that traditional development donor investment practices are not always well adapted to confront, Justin Guay, climate program officer at the Packard Foundation, told Devex. This is due in part to the disconnect between the expertise of most development bank staff — who tend to focus on extensive due diligence for a small number of large projects — and new opportunities to reach energy impoverished customers, which typically require smaller, riskier investments.