Indian Renewable Energy Development Agency Limited: history, ownership, mission, how it works & makes money

A Brief History of Indian Renewable Energy Development Agency Limited

The Indian Renewable Energy Development Agency Limited (IREDA) was established in 1987 as a Public Limited Company under the Ministry of New and Renewable Energy (MNRE), Government of India. The primary objective of IREDA is to promote and finance renewable energy projects in India.

Since its inception, IREDA has focused on facilitating the development of renewable energy technologies through various financial mechanisms. Over the years, IREDA has evolved from a mere financial institution to a comprehensive development agency, catalyzing the growth of the renewable energy sector.

In the fiscal year 2021-2022, IREDA sanctioned loans amounting to ₹14,000 crores and disbursed approximately ₹10,000 crores, reflecting a significant increase compared to the previous year. By the end of March 2022, IREDA’s total outstanding loan portfolio stood at around ₹45,000 crores.

IREDA has played a pivotal role in financing various renewable energy projects. It has reported financing for over 15,000 projects across solar, wind, small hydro, and biomass sectors, leading to an installed capacity exceeding 5,500 MW as of March 2022.

In 2021, IREDA achieved a revenue of ₹1,700 crores, marking an increase of 12% from the previous fiscal year. Its net profit stood at ₹420 crores, showcasing strong operational efficiency.

The following table summarizes IREDA's key financial data over the past five years:

In 2022, the Indian government targeted a renewable energy capacity of 500 GW by 2030, which underscores IREDA's essential role in reaching this goal. Additionally, IREDA is actively involved in the international renewable energy sector, collaborating with various global institutions to foster innovation and investment in renewable technologies.

As of October 2023, IREDA continues to be a catalyst for India’s energy transition, focusing on sustainable financing practices while striving for an increase in the renewable energy share in the overall energy mix.

A Who Owns Indian Renewable Energy Development Agency Limited

Indian Renewable Energy Development Agency Limited (IREDA) is a public sector enterprise owned primarily by the Government of India. The agency focuses on promoting and financing renewable energy projects. As of the latest reports, IREDA is a wholly owned subsidiary of the Ministry of New and Renewable Energy (MNRE).

The ownership breakdown of IREDA is as follows:

IREDA was established in 1987 and has since been instrumental in financing projects aimed at increasing the country's renewable energy capacity. At the end of FY 2022, IREDA’s total assets stood at approximately ₹16,000 crore (around USD 2.1 billion), reflecting its commitment to financing renewable energy projects.

The agency has played a crucial role in India's renewable energy growth, with a focus on solar, wind, and hydropower projects. As of March 2022, IREDA reported a cumulative loan sanction of around ₹1,00,000 crore (approximately USD 13 billion) for renewable energy projects, supporting more than 15,000 MW of installed capacity.

In the year 2022, IREDA's revenue from operations was approximately ₹1,500 crore (around USD 200 million), with a net profit of about ₹400 crore (around USD 54 million), indicating strong performance driven by the rising demand for clean energy financing.

The agency is also regulated by the Securities and Exchange Board of India (SEBI) and has been listed on the stock exchange since its Initial Public Offering (IPO) in 2022. IREDA’s IPO was valued at around ₹1,000 crore (approximately USD 130 million), and it received a good response from institutional and retail investors.

Furthermore, IREDA has received various accolades and recognitions for its contribution to renewable energy financing. In 2021, it was awarded the “Best Financial Institution for Renewable Energy Financing” by the Global Renewable Energy Awards.

In recent years, IREDA's strategic partnerships with both domestic and international institutions have bolstered its capacity to fund large-scale renewable projects. For instance, in 2021, IREDA signed a Memorandum of Understanding (MoU) with the International Solar Alliance (ISA) to enhance cooperation in solar energy financing.

As of 2023, IREDA continues to operate under the guidance of the MNRE, ensuring alignment with India's ambitious renewable energy targets of reaching 500 GW of non-fossil fuel-based capacity by 2030. The agency is pivotal in achieving this goal through its extensive financing and supportive schemes.

Indian Renewable Energy Development Agency Limited Mission Statement

The mission statement of the Indian Renewable Energy Development Agency Limited (IREDA) is to promote the development and commercialization of renewable energy technologies in India. IREDA aims to provide financial assistance for the development of renewable energy projects, thus facilitating the country's transition to a sustainable energy future.

IREDA's core mission is centered around the following key objectives:

• To serve as a primary financial institution for renewable energy projects.
• To encourage the use of renewable energy sources by providing financial support and incentives.
• To promote energy efficiency and conservation through innovative financing solutions.
• To develop and implement policies for the growth of renewable energy in alignment with national energy objectives.

As of the financial year 2021-2022, IREDA has made significant contributions to India's renewable energy sector, reflecting its mission in actionable results.

In terms of operational impact, IREDA reported a cumulative loan sanctioning of approximately INR 55,000 Crores since its inception in 1987. The agency has significantly impacted the renewable energy landscape, contributing to a total installed capacity of over 170 GW of renewable energy in India by 2022.

Furthermore, IREDA has focused on several strategic initiatives aligned with its mission:

• Enhancing access to affordable financing for green projects.
• Collaborating with various stakeholders, including state governments and private enterprises.
• Developing innovative financial products tailored for renewable energy.
• Supporting research and development initiatives in clean energy technologies.

IREDA's mission extends to fostering international cooperation in renewable energy development. The agency has engaged in various bilateral and multilateral partnerships to share knowledge and technology in the sector. It plays a crucial role in India's commitment to achieving 450 GW of renewable energy capacity by 2030 as part of its Nationally Determined Contributions (NDCs) under the Paris Agreement.

Through its focused efforts, IREDA continues to align with the Government of India's vision for sustainable energy development, enabling investment and growth in the renewable energy sector.

How Indian Renewable Energy Development Agency Limited Works

The Indian Renewable Energy Development Agency Limited (IREDA) plays a pivotal role in promoting and financing renewable energy projects in India. Established in 1987, IREDA functions as a public sector financial institution under the Ministry of New and Renewable Energy (MNRE).

IREDA primarily provides financial assistance for renewable energy and energy efficiency projects. Its operations encompass a wide range of renewable energy sources, including solar, wind, small hydro, biomass, and geothermal energy.

As of March 2023, IREDA has sanctioned over INR 1,25,000 crore in loans, supporting more than 12,000 MW of renewable energy capacity. The agency's diverse financing mechanisms include term loans, equity financing, and credit facilities aimed at both commercial and residential sectors.

The financial performance of IREDA has shown robust growth, with total income reaching INR 1,200 crore for the fiscal year ending March 2023, up from INR 1,000 crore in the previous year.

Funding Structure

IREDA's financing model is anchored in its ability to mobilize funds from various sources, including market borrowings, government grants, and international financial institutions. The table below outlines the funding sources and amounts for FY 2022-2023:

In terms of project financing, IREDA has a considerable portfolio focusing on different renewable energy sectors. As of 2023, the breakdown of the financed capacity is as follows:

IREDA also plays a crucial role in policy implementation by providing financial support under various government initiatives aimed at increasing renewable energy capacity. These include the Solar Park Scheme, Wind Energy Mission, and the National Biomass Cookstoves Programme.

In its effort to enhance transparency and accountability, IREDA has adopted several initiatives, including digital platforms for project tracking and disbursement processes. Its performance metrics also reflect in the rising credit ratings, with IREDA receiving an 'A+' rating from CRISIL in 2023.

Additionally, IREDA has embarked on international collaborations to bolster renewable energy, including partnerships with organizations like the World Bank and Asian Development Bank. These collaborations aim at leveraging technical expertise and funding for renewable energy projects across the country.

In conclusion, IREDA stands as a crucial facilitator in India's transition towards a sustainable energy landscape, leveraging its financial capabilities and partnerships to foster growth in the renewable sector.

How Indian Renewable Energy Development Agency Limited Makes Money

Indian Renewable Energy Development Agency Limited (IREDA) primarily generates revenue through financial assistance for renewable energy projects across India. As of March 2023, IREDA reported a total revenue of ₹1,169 crores, reflecting a growth of approximately 15% from the previous financial year.

The company focuses on lending for various renewable energy sectors, including solar, wind, hydro, and biomass. IREDA provides loans at competitive interest rates, which averages around 8% to 9%, depending on the project and risk assessment.

In FY 2022-23, IREDA's loan disbursement was around ₹8,500 crores, a significant increase of 22% from the prior year. This positive trend is attributed to the Indian government's push towards renewable energy and the ambitious target of achieving 500 GW of renewable energy capacity by 2030.

The following table summarizes IREDA's financial performance, segmental revenue, and loan disbursement trends over recent years:

In addition to loans, IREDA also earns from investment income and consultancy services related to renewable projects. The consultancy revenue accounted for about 8% of the total revenue in FY 2022-23, approximately ₹93 crores.

Furthermore, IREDA plays a pivotal role in facilitating government schemes, such as the Solar Park Scheme and Wind Power Policy, which further increase its revenue opportunities through project financing and advisory roles.

IREDA has been successful in attracting foreign investment, with over ₹1,000 crores received from international financial institutions to support its financing activities. This capital allows IREDA to offer better lending terms and expand its portfolio in sustainable projects.

The company’s non-performing asset (NPA) ratio remains low, recorded at 2.5% as of March 2023, which demonstrates effective credit risk management, thus enhancing profitability margins.

Overall, IREDA generates income through a mix of interest from loans, consultancy fees, and strategic foreign investments, contributing to its role as a key player in India's renewable energy landscape.