India’s plan to install 500GW of renewable capacity by 2030 and achieve 60% non-fossil fuel in its power mix by 2035 hinges on access to suitable debt financing, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA).
The study, ‘Financing the energy transition: A credit perspective on India’s power sector’, finds Indian credit markets are differentiating between renewable and thermal assets.
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IEEFA estimates annual investment needs for renewables, storage and transmission will rise from around $68bn by 2032 to roughly $145bn by 2035.
Given the long asset lives of clean energy projects, the report states that long-tenor amortising debt is the most efficient funding route.
Companies with larger renewable portfolios report stronger operating margins due to the absence of fuel costs, and maintain broader access to offshore financing and international lenders.
By contrast, utilities linked to thermal generation face reduced access to international capital markets.
All outstanding US dollar bonds from Indian power companies are linked to renewable or hydropower projects.
IEEFA reviewed financial indicators for eight power-generating companies – Adani Green Energy, Adani Power, JSW Energy, NLC India, NTPC, ReNew Power, SJVN and Tata Power – which together account for roughly one-third of India’s installed capacity.
The analysis concludes that transition risks will not be uniform. Companies with constrained balance sheets have less flexibility to adapt decarbonisation plans and are more likely to encounter tighter funding conditions.
State-owned enterprises such as NTPC and SJVN benefit from government backing that supports refinancing options not typically available to private issuers.
The report highlights NTPC’s scale, 51.1% government ownership and sovereign-aligned credit rating as central to mobilising transition finance.
The eight utilities examined rely on bank loans for nearly 80% of their debt, indicating limited use of bond markets.
IEEFA – Europe Debt Markets sustainable finance analyst Kevin Leung said: “The power sector is already among the largest borrowers in India’s domestic debt markets, and this role is likely to expand as investments accelerate. In this context, transition planning is, fundamentally, a question of debt market planning.”
