REC to launch dedicated fund to finance GUVNL’s RE projects

Ahmedabad: Rural Electrification Corporation (REC) Limited, a central public sector enterprise, will soon launch a dedicated fund to finance renewable energy (RE) projects for Gujarat Urja Vikas Nigam Limited (GUVNL). Gujarat has recently set a target of attaining 100GW renewable energy capacity by 2030.
The fund will be created in partnership with multilateral agencies, wealth funds, and green funds and will directly finance RE developers who win GUVNL's bids.Sources confirmed that a proposal around this is already being discussed at the Union ministry of power.
A tripartite agreement involving REC, GUVNL, and project developers will be structured around an escrow account, ensuring secure loan repayments and providing assurance to investors. This initiative comes as GUVNL plans to add 44GW of RE capacity by 2030, with support from sovereign wealth and green funds. The fund will directly finance RE bid winners, helping Gujarat accelerate its path to achieving net zero emissions by 2047.
Jaiprakash Shivahare, MD, GUVNL, said, "The innovative financing model is aimed at enhancing Gujarat's leadership in India's RE sector. In an effort to create a win-win situation for all stakeholders, we have begun exploring different solutions. One potential approach to reducing the cost of energy transition — and thus achieving the 2047 net-zero goal — is to leverage the availability of low-cost financing for renewable energy projects. GUVNL's proven track record, strong financial position, and robust risk mitigation strategies make it possible to secure lower-cost funding for bid winners in GUVNL tenders."
In 2023-24, GUVNL signed power purchase agreements (PPAs) for 13GW of renewable energy and secured 900MW/3600MWh of battery energy storage systems (BESS) capacity at highly competitive rates. This achievement has resulted in the combined cost of RE plus storage being cheaper than the cost of electricity from new coal plants.