India is just a few years away from becoming the world’s most populous country, but it’s a far cry from the world’s largest energy producer. The government of India has set ambitious targets to meet this demand and its continued economic productivity will hinge on its ability to meet them. The challenge—as well as the opportunity—is significant.
For this reason, USAID’s Development Credit Authority (DCA) has pursued an unprecedented new partnership to facilitate a groundbreaking investment in Indian clean energy. Through a DCA loan guarantee, announced by Secretary of State John Kerry yesterday at the start of the fourth annual U.S.-India Strategic Dialogue, our partners Nereus Capital and Northern Lights Capital Group will make a $100 million investment in clean energy production. The partnership is expected to create hundreds of additional megawatts of sustainable energy capacity and will help to advance India’s nascent clean energy industry.
Here at the Development Credit Authority, this is the first time that we’ve partnered with a clean energy investment fund. We’re eagerly pushing the envelope to find new ways to stretch our investment even farther and for greater impact. While DCA averages an already incredibly high $28 leverage ratio for every dollar we invest—in this deal, we will secure a leverage rate that is exponentially higher. Through a comparatively tiny investment, we can catalyze four to five medium-scale clean energy projects directly and up to ten to twelve indirectly in sectors such as wind, water, solar, or biomass.
This investment could eventually create as much as 300 – 400 additional megawatts of sustainable energy capacity, which is equivalent to lighting the homes of tens of thousands of Indian families. These projects will serve a variety of customers, including both households that get by on just few dollars a day as well as larger or even multi-national companies. Through reliable access to power, these companies will be better equipped to create jobs, make large-scale investments, and contribute to economic growth.
Incredibly, we can do all of this at virtually no cost to the American taxpayer.
By thinking creatively about how we partner with private sector actors, we’re continuing to use our resources and capacity more smartly and efficiently. We’re helping to ensure that U.S. financial institutions can securely invest in this market and build a clean energy future for India.