This post is a part of BioBiz’s Bio-CNG Perspectives.
BioBiz, a division of EAI, is a leading market intelligence & strategic consulting firm for the Indian bio-based sectors.
This blog post uses the terms bio-CNG and renewable natural gas (RNG) interchangeably.
Bio-CNG or bio-compressed natural gas, also known as sustainable natural gas or biomethane, is a biogas which has been upgraded to a quality similar to fossil natural gas and having a methane concentration of 90% or greater. As the gas is derived from natural and renewable sources, it is also termed renewable natural gas (RNG).
Financing biogas projects have faced various challenges due to large capital requirement, long payback periods, regulatory, policy hurdles and viability of innovative technology and non-maturity of technology. However, long-term financing for the biogas sector is critical to achieving the development goals in order to have a high socio-economic rate of return.
Existing financing options for Biogas in India
| Financing institutions | Terms and conditions | Fund type | Website |
| NAMA facility fund (Nationally Appropriate Mitigation Actions, Germany) | Supports projects that tackle specific local challenges for cutting emissions. | Grant | https://bit.ly/3cjQkK9 |
| IREDA credit(Indian Renewable Energy Development Agency Ltd., India) | Supports biomass and waste-to-energy projects with debt funding (max upto 50%). The interest rate varies between 10.25% and 11.15% for private borrowers. A moratorium period may not be provided. Maximum loan repayment period shall be 10 years from the date of disbursement subject to the condition that the repayment period shall not be more than balance life of offtake agreement less than 5 years | Debt | https://bit.ly/2xojE3H |
| REC (Rural Electrification Corporation, India) and PFC (Power Finance Corporation, India) | Supports biomass and waste to energy projects with long term debt financing. Three year moratorium period and interest rate vary between 11.5% and 12.5% for private borrowers | Debt | https://bit.ly/3cocvyO
https://bit.ly/3a9lRNp |
| ADB (Asian Development Bank, Philippines) | Supports to fund roads and renewable energy project activities | Debt | https://bit.ly/2K4Qf15 |
| ADB (Private sector) (Asian Development Bank, Philippines) | Supports co-financing to non-sovereign infrastructure projects at different stages of development, including early stage, growth stage and Greenfield and brownfield projects. Project finance and corporate finance transactions and support a range of private sector participation modalities including public-private partnerships | Debt and equity | https://bit.ly/2K4Qf15 |
| JICA (Japan International Cooperation Agency, Japan) | Supports to fund renewable energy generation projects in Asia along with ADB. Project finance and corporate finance transactions and support a range of private sector participation modalities including public-private partnerships | Debt | https://bit.ly/34Fuezk |
| YES Bank, India | Supports to finance 5 GW of renewable energy projects from 2015-2020 for projects that support climate change mitigation actions | Debt | https://bit.ly/2RDhsw4 |
| Green Climate Fund, South Korea | Supports providing grants, concessional debt financing, equity and guarantees through NDA, NABARD, SIDBI to projects that facilitate low emission energy access, sustainable land and forest management and resilient ecosystems | Capital grant, debt, equity | https://bit.ly/3cxfUf9 |
It could be observed that there is a growing interest from leading financial institutions for financing emerging renewable energy projects. Viable technology, business models and partnerships could be avenues for entrepreneurs to receive long term financial support from these organizations.
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