This presentation discusses financial opportunities in rural India's clean energy sector. It outlines India's potential as a source of biomass energy and tools the IDA Private Sector Window can provide to invest in clean energy projects, including risk mitigation facilities, funding for small and medium enterprises, project-level hedging, and crowding in private investment. A blended financial model incorporating sources like overseas development assistance, remittances, and mobilized funds can help address the investment gap and mitigate risks through mechanisms like public-private partnerships.

1. UNLOCKING FINANCIAL
OPPORTUNITIES
Clean Energy: India

2. Key Investment focus for PSW
IDA is financial inclusion in
Agribusiness.
This Presentation demonstrates
the financial opportunities
arising in rural parts of India.
Tools being offered by IDA
Private Sector Window to
achieve the Strategic
Development Goals.

3. CLEAN ENERGY
…India is one of the largest source of Bio- Mass. Bio mass energy is that
produce through contemporary biological process such as agriculture,
anaerobic digestion, Etcetera.

4. Facility that can be utilized to
this project from PSW
potential:
•Risk Mitigation.
•Facility for SME.
•PPP Project level hedging
facility.
•Crowd-in private investment.
•First loss risk in challenging
markets.

5. Despite India being one of the largest source bio mass, its contribution is very less
compared to other countries.

7. The energy created in a village can be utilised in development of that village.
“Investment Grade” Policy can be made in order to crowd in investment in this
sector.
A blended financial model can be made up to mitigate the risks associated
with the project.
Investment Pattern
ODA
Remittances
Mobilization
Gap

8. Finance Risk:
Assessment of risk and return is
fundamental to finance and
investment decisions. It differs
from cost benefit analysis, which
often underpins economic
assessment of policy options. In
general, higher risk equates with
an expectation of higher returns, or
a higher premium for lending;
different sources of finance have
different appetites for risk, and
different expectations of returns.
Venture Capitalist, Private Equity,
Infrastructure Funds, Institutional
Investors are those who take the
finance risk.

9. Investment grade in renewable energy policy to be made:
•Clear, unambiguous policy objectives, with clear enforcement
mechanisms;
•Policy and regulation covering all the factors within the ‘boundary of the
deal’ – e.g. from planning approval to transmission grid access;
•Carefully designed incentive or support mechanisms to achieve set
objectives;
•Policy stability across a project-relevant duration;
•Simplicity – reduction of complexity and variables that might add risk;
• Immediate attention to infrastructure – planning, sequencing and
regulatory considerations;
• Integration of infrastructure across the energy system and regulation in
energy markets, to ensure the overall system is optimized for significant
uptake of renewable energy, and ‘demand-side’ options.

10. PPP Project or Blended Finance.
A business model can be generated by leveraging the funds from IDA PSW to
crowd in the investment gap in the project.
Public-Private Partnerships can be a good example to bring in expertise and
value to the table.
Financial Instruments can be used to mitigate the risk and allocate it to the
party which can take in that risk.