Font size:
Print
REC Ltd to Fund Nuclear Power Projects and Energy Transition
Context:
REC Ltd, a state-run power-sector lender, is set to play a crucial role in India’s energy transition by financing green projects, including nuclear power. The firm aims to allocate ₹1 trillion annually towards green energy projects, with a total commitment of ₹6 trillion by 2030.
Key Highlights:
REC’s Commitment to Green Energy:
- REC Ltd aims to sanction ₹1 trillion annually for green projects from now until 2030.
- The firm’s total green energy commitment is ₹6 trillion by the end of the decade.
Financing Nuclear Power Projects:
- REC is open to financing nuclear power projects, which are non-fossil fuel-based and produce minimal carbon emissions.
- Talks have been initiated with the Nuclear Power Corporation of India Ltd (NPCIL) regarding potential projects, though no formal requests for financing have been made yet.
- India’s nuclear power generation capacity is expected to increase from 8 GW to 22.4 GW by 2030.
Focus on Renewable Energy Loans:
- REC’s renewable energy loan portfolio target is ₹3 trillion by 2030, representing 30% of its overall loan book.
- In FY24, REC sanctioned ₹1.36 trillion worth of renewable energy projects, with plans to continue this pace for the next six years.
- The loan book for renewable projects is expected to grow significantly from the current ₹43,000 crore.
Cross-border Transmission Projects:
- REC is exploring opportunities in cross-border transmission projects as part of the regional interconnections and India-Sri Lanka transmission line projects.
- The India-Sri Lanka transmission line is still in the planning phase, and REC will consider financing once it takes shape.
- The ‘One Sun One World One Grid’ initiative presents further opportunities for cross-border energy connections in Southeast Asia.
Diversification and Infrastructure Projects:
- Although REC has diversified into non-power infrastructure sectors, there has been a decline in disbursals for these projects due to a renewed focus on coal-based power and green energy projects.
- Power generation, distribution, and transmission remain the company’s core focus areas.
Borrowing Strategy:
- REC plans to borrow ₹1.6 trillion (or $20 billion) during FY25 and has already disbursed ₹84,000 crore.
- External commercial borrowings at lower rates and 54EC capital gain bonds are key instruments in REC’s borrowing strategy.
- REC maintains a balanced mix of borrowing sources, with 40% from domestic corporate bonds, 18% from domestic term loans, and 10% from 54EC bonds.
Support for India’s Green Transition:
- At the ‘RE-INVEST 2024’ conclave in Gandhinagar, REC committed ₹1.12 trillion for green energy financing, marking the highest contribution among public sector entities.
- The company continues to support India’s long-term vision of achieving energy security through sustainable and non-fossil energy sources.
Conclusion:
REC Ltd’s aggressive push toward financing green energy and nuclear power projects is aligned with India’s energy transition goals. With a focus on renewable energy, cross-border transmission, and strategic borrowing, REC aims to play a pivotal role in the country’s sustainable energy future.
