India is likely to seek special long-term funding from the Global Climate Fund (GCF) for hedging currency risks for renewable power projects.

Ajay Mathur, a member of the Prime Minister’s Council on Climate Change, and former Director-General of the Bureau of Energy Efficiency, told Business Line , after a Bengal Chamber of Commerce and Industry event, that to reduce finance cost and mitigation of currency fluctuation risk hedge for solar and wind energy projects, the Centre is considering a channel of funds from GCF.

“Foreign funding for the projects could be had at 2-3 per cent. However, financing cost for currency hedge for three-five years for a project developer is at around 7 per cent. This makes renewable energy project costly and unviable for supplying power at a competitive rate,” he explained. The special funding could be as low-cost grants from GCF, Mathur indicated.

So the Centre is considering seeking special long-term fund (10 years and above), which costs around 2-3 per cent, from GCF, Mathur said.

The Union Government is also considering a hedging instrument that takes care of the needs of the renewable energy sector.

Meanwhile, SIDBI and IDFC have applied for accreditation from GCF for project evaluation and due diligence. South Korea-headquartered GCF has already accredited Nabard for such work for Indian renewable projects.

Mathur said during the current fiscal, the country, through mandatory and voluntary energy efficiency drive for electrical instruments, has saved about 14,000 MW. “This represents 7 per cent of the energy consumption in the country,” he added.

The Centre has rolled out programmes for energy savings for 20 products.

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