ABSTRACT
Globally, institutional investors such as pension funds and insurers have been instrumental in propagating the growth of environmental, social, and governance (ESG) investing. India has seen several global pension funds and insurers invest in the RE sector, deploying capital for both debt and equity. Domestic institutional investors (DIIs), however, have largely been sitting on the fence when it comes to investments in clean energy technologies. Hence, private sector companies which are touted to drive the renewable energy capacity additions in the country are largely devoid of capital support from these DIIs.
There are several impediments to the flow of capital into clean energy assets by DIIs such as shallow domestic bond markets, lower credit ratings of RE sector bond issues, non-consideration of ESG risks and opportunities by DIIs in investment decision-making, lack of investment intermediaries to educate DIIs and bridge the supply–demand gap, lack of pooled investment vehicles for equity investments into clean energy companies, and insufficient regulatory support to facilitate capital deployment in RE infrastructure are some major ones. Concerted efforts to weed out these issues will help unlock a major source of capital for domestic clean energy firms and massively help India achieve its energy transition targets.
