According to reports, The Bureau of Energy Efficiency (BEE) plans to set up a partial risk guarantee fund (PRGF) to enhance financing options for energy efficiency projects. PRGF would provide commercial banks with up to 50 per cent of risk coverage against loans issued for such projects. BEE is also looking to set up a venture capital fund for the same.
BEE has initiated the process and has requested proposals to shortlist a project approval unit for it, a senior official of the agency said. Under the programme, participating financial institutions would take guarantee of up to Rs 3 crore per project from the PRGF before disbursement of loans. In case of default, the fund will cover the first loss, subject to maximum of 10 per cent of the total guaranteed amount and cover the remaining default amount on pari-passu basis up to the maximum guaranteed amount, he added.
BEE was created with a mission to assist in developing policies and strategies to enhance the overall energy efficiency of the country. Overcoming barriers for financing of energy efficiency is a key policy goal of the agency. The Centre is setting up regulatory and financial incentives to enable a market for energy efficiency, which is estimated to be about Rs 74,000 crore. Energy efficiency can be enhanced by ways including creating a demand for energy-efficient products and services and by spreading awareness about the efficacy of the goods.
Moreover, ensuring adequate supply of energy-efficient products and services is a must. This is being done by creating a cadre of certified energy professionals, promoting energy service companies, standards and labelling of end-use appliances. PRGF is being created to support such initiatives.
To administer the funds, a new organisation named Energy Efficiency Services (EESL) has been established. EESL is a joint venture of NTPC, Power Finance Corporation, Rural Electrification India and Power Grid with a mission to facilitate market implementation of energy efficiency projects. EESL will also function as resource and expert centre and may take the role of energy service company. The initial equity of EESL is Rs 190 crore with equal contribution from the four sponsors.