The World Bank
India: Green Energy Programmatic Development Policy Financing (P181032)
Program Information Document
(PID)
Concept Stage | Date Prepared/Updated: 12-Apr-2023| Report No: PIDC36019
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The World Bank
India: Green Energy Programmatic Development Policy Financing (P181032)
BASIC INFORMATION
A. Basic Project Data OPS TABLE
Country Project ID Project Name Parent Project ID (if any)
India P181032 First Clean Energy
Programmatic
Development Policy Loan
(P181032)
Region Estimated Board Date Practice Area (Lead) Financing Instrument
SOUTH ASIA Jun 29, 2023 Energy & Extractives Development Policy
Financing
Borrower(s) Implementing Agency
Ministry of Finance Ministry of New and Renewable Energy
Proposed Development Objective(s)
To strengthen the enabling policy framework to promote clean energy investments.
Financing (in US$, Millions)
FIN_SUMM_PUB_TBL
SUMMARY
Total Financing 1,000.00
DETAILS -NewFin3
Total World Bank Group Financing 1,000.00
World Bank Lending 1,000.00
Decision
The review did authorize the preparation to continue
B. Introduction and Context
Country Context
1. The Government of India has signaled a strong commitment to low-carbon, long-term development and taken
significant steps in this regard. While India’s per capita emissions of greenhouse gas (GHG) emissions are relatively low,
the country is nonetheless the world’s third largest emitter of GHGs. Energy-consuming sectors (power, industry,
transport, and buildings) contribute to three-quarters of the annual total of 2.7 gigatons CO2e of GHG emissions in India.
Industry and transport—both hard-to-abate sectors—are estimated to account for two thirds of the future emissions by
2050. The government’s climate commitments announced at COP26, including the revision in August 2022, are: (a) net
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India: Green Energy Programmatic Development Policy Financing (P181032)
zero emissions by 2070; (b) 50 percent of power capacity from non-fossil fuels by 2030; (c) a reduction in cumulative
carbon emissions by 1 billion tons by 2030; (d) a reduction of carbon intensity by 45 percent from 2005 to 2030; and (e) the
creation of an additional cumulative carbon sink of 2.5 to 3 billion tons of CO2 equivalent through additional forest and
tree cover by 2030.
2. The Government of India has launched a series of policies to meet renewable energy targets. India’s power
sector is experiencing a paradigm shift towards RE, where annual additions of renewable capacity have outpaced those
from coal power since 2017. The government’s green energy transition strategy is to accelerate RE development that will
over time displace fossil fuels to meet the growing energy demand. RE promotion policies such as fiscal incentives, large-
scale procurement mechanisms through Solar Parks, waiving of inter-state transmission charges and losses, must-run
status for RE generating stations, production-linked incentives (PLI) for solar power and battery storage, reverse auctions,
renewable purchase obligations, have helped accelerate RE take-off. Several phases of the National Solar Mission have
been instituted since 2010 to promote solar power. The Government has envisaged 100 gigawatt-hours (GWh) of battery
storage by 2030 to improve RE grid integration. Improvements in the network infrastructure and deepening of the power
markets have also facilitated RE grid integration. Further, in December 2022, the passing of the Energy Conservation
(Amendment) Bill has laid the foundation for India to develop a national carbon market that will contribute towards India’s
energy transitions journey.
3. The government has adopted strong policies to mobilize significant private sector investments in RE, which has
led to exponential growth of the RE market over the past decade. Several phases of the National Solar Mission have been
instituted since 2010 to promote solar power. The National Repowering Policy for Wind Power Projects and the National
Offshore Wind Policy and a Strategy Paper for offshore wind set a target of 30 GW for offshore wind by 2030. The
government has adopted a series of enabling policies to mobilize significant private sector investments in RE, including
but not limited to: (a) fiscal incentives that have brought down the solar photovoltaics (PV) costs from 25 Indian
rupees/kWh to 2 Indian rupees/kWh in a decade; (b) competitive reverse auctions that have also resulted in dramatic cost
reduction of solar PV; (c) waiver of inter-state transmission charges for RE power generators; (d) large-scale grid-
connected Solar Parks that have contributed to the bulk of solar PV installed capacity today1; (e) renewable purchase
obligations mandating that the distribution utilities purchase a minimum share of RE; (f) must-run status for RE power
plants to ensure grid integration; (g) PLIs for solar power to reduce costs and ensure supply; (h) building by-laws for
mandatory provision of roof top solar for new construction; and (i) the KUSUM scheme to promote solar pumps in rural
areas.
4. To bridge the viability cost gap of green hydrogen, the government announced the NGHM in January 2023, with
a total budget of US$2.4 billion. The NGHM’s objective is to provide a comprehensive action plan to establish a conducive
green hydrogen ecosystem and catalyze large-scale green hydrogen investments, to eventually position India as a global
hub for production, usage, and export of green hydrogen and its derivatives. Indeed, to achieve India’s net-zero emission
target, green hydrogen would need to meet 30 percent of the country’s final energy demand by 2070. Green hydrogen
will play a crucial role in reducing emissions in the hard-to-abate industrial sectors such as refineries, fertilizer and
methanol production, iron and steel, and chemical industries, as well as long-haul transportation and shipping. In addition,
displacement of imported fuels by green hydrogen represents a significant opportunity to reduce economic costs and
improve energy security.
5. Scaling up green energy will take time, and a two-phase Development Policy Loan (DPL) will allow the
government to develop and implement ambitious policy measures to sustainably develop green energy. Once the
1
For instance, the World Bank’s support of US$100 million shared infrastructure under the ’Shared Infrastructure for Solar Par ks'
project has resulted in more than US$4 billion private investments in solar parks.
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India: Green Energy Programmatic Development Policy Financing (P181032)
NGHM is issued, the Government is required, within a year, to issue a series of concrete policies and regulations to
implement NGHM and thereby reduce costs and increase market demand. Over this period, the World Bank will continue
to support the Government with technical assistance to help the green energy transition agenda and meet the proposed
triggers under the DPL-2. Beyond the DPL series, the Bank continues to remain engaged through analytical work, technical
assistance and financing as needed.
Relationship to CPF
6. This operation is aligned with the Country Partnership Framework’s (CPF) focus areas on (a) promoting
resource-efficient growth and (b) enhancing competitiveness and enabling job creation. Through the first focus area,
the World Bank Group has committed to supporting sectors and areas that are critical for facilitating growth and poverty
reduction while promoting greater resource efficiency. Through the second focus area, the World Bank Group is aspiring
to strengthen key enablers for job creation and to improve competitiveness through better business and policy
environments, strengthened workforce skills, and increased firm capabilities.
C. Proposed Development Objective
7. This US$1 billion program will be the first phase of a two-phase DPL whose Program Development Objective is
to strengthen the enabling policy framework to promote clean energy investments. The operation will consist of three
pillars: (a) scaling up renewable energy; (b) promoting green hydrogen; and (c) enhancing climate finance for green energy
investments. Pillar 1 aims to scale up renewable energy penetration in India, reduce RE costs, improve RE grid integration
to decarbonize the power sector, and ensure RE power supply to green hydrogen production. Pillar 2 aims to strengthen
the enabling policies and regulations for green hydrogen to reduce costs and increase market demand by supporting the
government of India’s National Green Hydrogen Mission (NGHM) and the regulatory development it outlines, which will
lead to decarbonizing the hard-to-abate industrial sector. Pillar 3 aims to support a national carbon market and increase
green financing to enable private sector investments in green energy.
Key Results
Indicator Name Baseline (2023) Target (2026)
Pillar 1: Scaling up renewable energy
Increase in the share of renewable energy in power consumption 24.61% (2022-23) 33.01% (2025-26)
Increase in the share of energy storage with solar/wind in power 0% (2022-23) 2% (2025-26)
consumption
Increased electricity traded in the ancillary service market 0 To Be Determined
Improved Grid Code issued Existing Grid Code not Improved Grid
conducive for RE grid Code issued
integration
Private investments in high efficiency solar PV manufacturing 0 US$1.13 billion
increased
Offshore wind power capacity awarded (GW) 0 4
Pillar 2: Promoting green hydrogen
Incentives for green hydrogen production and utilization approved 0 2.1
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India: Green Energy Programmatic Development Policy Financing (P181032)
Indicator Name Baseline (2023) Target (2026)
(US$ billion)
Private sector investments for the approved green hydrogen 0 10
projects committed (US$ billion)
National green hydrogen regulation framework that establishes Limited green hydrogen National green
safety standards for green hydrogen issued and approved safety standards hydrogen standards
and regulation
frameworks that set
safety standards
approved
Green hydrogen standards adopted No green hydrogen Green hydrogen
standards standards issued and
adopted
Pillar 3: Enhancing climate finance for green energy investments
Launch of a national carbon market No carbon market exists A national carbon
market launched
Share of budget allocated to the Ministry of New and Renewable 0.17 % of total central 0.23% of total central
Energy increased government spending government spending
D. Concept Description
8. This DPL focuses on three pillars of policy reforms to enable a policy framework to promote investments in
clean energy .
• Pillar 1: Scaling up renewable energy. Achieving the ambitious RE targets requires reducing costs, removing
supply chain bottlenecks, mandating targets, and improving RE grid integration. The RPOs and the PLI scheme
for solar PV are critical to scale up and reduce costs of RE to achieve the government’s RE targets. The ancillary
service market is essential to remunerate energy storage (both battery storage and PSH) services, and Grid
Codes are important measures to enable RE grid integration. In particular, the government plans to develop
offshore wind technologies for which conducive policies are the key to leveraging private sector investments.
• Pillar 2: Promoting green hydrogen. The NGHM is critical to accelerating development of a green hydrogen
market in India, and the detailed implementation policies and regulations for the NGHM are essential to
increase market demand and reduce costs to mobilize significant private sector investments in green
hydrogen and ensure successful implementation of the NGHM.
• Pillar 3: Enhancing climate finance for green energy investments. Pricing carbon emissions under a carbon
market will provide a level playing field for RE/green hydrogen against fossil fuel alternatives and reduce
viability gaps. Green financing will catalyze the significant volumes of public and private financing required for
green energy to meet the net zero target.
E. Poverty and Social Impacts, and Environmental, Forests, and Other Natural Resource Aspects
Poverty and Social Impacts
9. Though social impacts of the proposed DPL are likely to be positive, the social risks associated with the land
acquisition, loss of livelihood, relocation and labor issues is estimated to be substantial. The proposed DPL is likely to
have positive social impacts, such as:(a) clean affordable energy for all, including the poor and vulnerable, which will have
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India: Green Energy Programmatic Development Policy Financing (P181032)
positive impact on health and human capital development; (b) micro, small and medium enterprises (MSME) to benefit
from reduced cost of solar PVs; and (c) additional employment opportunities with new RE production units. The financing
mechanisms may also include instruments that offer subsidized financing options to women entrepreneurs to help address
the specific needs of the women-led businesses and promote gender inclusion. Communities are expected to benefit from
the project thanks to the generation of additional livelihood sources and Corporate Social Responsibility investments.
10. As required under a DPL, a Poverty and Social Impact Analysis (PSIA) study will be undertaken to assess the
positive and adverse impacts on the well-being of different social and livelihoods groups, with focus on the poor and
vulnerable, including women. It will be conducted in line with the prior actions identified in the DPL. The PSIA process will
support stakeholder consultations for seeking feedback from government officials, industry associations, development
partners, those impacted by acquisition of land or loss of livelihood, beneficiaries, and other relevant stakeholders.
Findings and recommendations from the stakeholder consultations will be integrated in the PSIA and documented in the
program document by negotiations.
Environmental, Forests, and Other Natural Resource Aspects
11. The prior actions supported through this DPL are likely to have a positive impact on India’s environment, forests,
and other natural resources. There is no short or long-term climate change or geo-hazard risks relevant to this operation.
Future investments under four of the policy areas supported by the operation may result in downstream large-scale
capacity augmentation and new construction of green hydrogen, electrolyzer, and lithium-ion battery production facilities,
indirectly influence mining of raw materials such as nickel, cobalt, and zirfon; and induce large-scale desalination, each of
which has potential for negative environmental effects. The national legal and regulatory framework incorporates some
of the necessary mitigation measures to adequately manage these potential effects and provides the basis for establishing
the needed regulatory frameworks.
12. India has a well-developed environmental legal and regulatory framework. Current environment legislation in
India, most of which dates to the 1970s and 1980s, includes statutory acts and laws on protection of the environment;
ecological audit and monitoring; protection of flora and fauna; environment information and education; soil, water, and
air quality; biological safety; human health and safety, including occupational health and safety; and waste and chemicals
management. These laws, along with the regulations and standards approved by the Government and Line Ministries,
create a favorable legal framework for environment protection and for the use and protection of the country’s natural
resources. They also enforce the rights of citizens to environmental safety, access to information, recourse to
compensation from any environmental/safety disaster under several laws including a Public Liability Insurance Act, 1991.
In particular, the Environment (Protection) Act, 1985, defines environmental emergencies and ecological disasters and
prescribes the order of actions in such situations, defines the obligations of officials and enterprises to prevent occurrences
and eliminate consequences, and the liabilities of the persons or organizations that damage the environment.
.
CONTACT POINT
World Bank
Xiaodong Wang, Dhruv Sharma, Surbhi Goyal
Lead Energy Specialist
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The World Bank
India: Green Energy Programmatic Development Policy Financing (P181032)
Borrower/Client/Recipient
Ministry of Finance
Rajat Kumar Mishra
Additional Secretary
rk.mishra62@nic.in
Implementing Agencies
Ministry of New and Renewable Energy
Bhupinder Singh Bhalla
Secretary
secy-mnre@nic.in
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 473-1000
Web: http://www.worldbank.org/projects
APPROVAL
Task Team Leader(s): Xiaodong Wang, Dhruv Sharma, Surbhi Goyal
Approved By
APPROVALTBL
Country Director: Martin Raiser 18-Apr-2023
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