Renewables to Get Most of $1 Billion ExIm Bank Credit

Bloomberg | March 26, 2015 | Column by Reed Landberg

Renewable energy developers will receive “the vast majority” of a $1 billion credit line the Export-Import Bank of the U.S. extended to India, the institution’s president said.

Regulatory policies in India, including terms for selling power, are conducive to financing solar- and wind-power projects, and make it easier for the bank to ensure it will be repaid, said Fred Hochberg, who is also chairman of the Washington-based lender.

The comments are an indication that the ExIm bank’s funding for renewables is poised to rise after sliding to $200 million in 2014. That’s down from a peak of $721 million four years ago, according to data compiled by Bloomberg.

“We were the largest financier outside of India of renewable energy projects there, then they went into a pause,” Hochberg told a group of reporters in London on Thursday. “There were fewer solar and wind projects going on.”

The credit line sealed during President Barack Obama’s visit with Indian Prime Minister Narendra Modi in January is part of the U.S. effort to back an unprecedented expansion of clean energy in developing nations and check rising pollution blamed for global warming.

India’s Ambitions

Modi wants to install by 2022 five times as many photovoltaics as the U.S. has now, an ambition that may cost $160 billion, according to the Council on Energy, Environment & Water, a research group in New Delhi. Obama wants India to join in a global deal limiting greenhouse gases, and India’s ministers are seeking financial support from the West to cut the cost of emissions.

The U.S. developer SunEdison Inc. announced in January plans to build as much as 5 gigawatts of wind and solar power in India, and First Solar Inc., the largest U.S. solar manufacturer, is also developing power plants in the country.

Regulations in India permit power purchase agreements that extend as long as 20 years. That makes it easier for banks to finance solar and wind projects. The terms contrast with the system in Turkey, where Hochberg said contracts are repriced every year.

“You can’t finance a loan one year at a time,” he said.

Hochberg said he couldn’t forecast how much the bank might lend to the industry either in India or worldwide because “it very much depends on the internal policies” in each nation and what developers ask for.

Congress is considering whether to renew the 81-year-old bank’s mandate to lend, which expires June 30. Some Tea Party aligned members of congress including House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, have called for the institution to be abolished because it’s the face of “crony capitalism.”

Two bills sponsored by both Republicans and Democrats are in each house of Congress. “I’m encouraged by the sense of momentum,” Hochberg said.

To contact the reporter on this story: Reed Landberg in London at [email protected]

To contact the editors responsible for this story: Reed Landberg at [email protected] Will Wade, Jim Efstathiou Jr.

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Renewables to Get Most of $1 Billion ExIm Bank Credit
PAUSE, People of Albany United for Safe Energy
PAUSE is a grassroots group of individuals who have come together to promote safe, sustainable energy and fight for environmental justice. We engage the greater public to stop the fossil fuel industry’s assault on the people of Albany and our environment.