NTPC Renewable Energy (NTPC-REL), a subsidiary of NTPC, has recently made headlines for its endeavours in renewable energy installations. The firm has inked its initial Green Term Loan agreement, dedicated to the establishment of Solar Projects in Rajasthan and Gujarat. In addition, NTPC-REL is at the helm of constructing India’s single largest local solar power park, featuring an impressive capacity of 4.75 GW, located in Kutch. Through these ventures, NTPC aims to augment its energy portfolio with substantial renewable energy capacities.
Understanding ‘Green Loan’
Green loan is a special financing model designed to boost and bolster businesses eager to fund projects with a significant environmental impact. Essentially, green loans are oriented towards underwriting ‘green projects’. This novel financing approach underscores the increasing commitment of the business world towards environmental sustainability and conservation.
Perks of Green Loans
A green loan comes with several benefits that extend beyond merely providing financial support for green projects. Some of these perks include:
Corporate Advantage
The acquisition of a green loan can potentially enhance a company’s value. It demonstrates a commitment to promoting Green Projects, possibly attracting public acceptance and helping the company meet their Corporate Social Responsibility (CSR) targets.
Economy Meets Ecology
Through green loans, lenders can contribute to the realization of environmental benefits that help foster a sustainable society. Simultaneously, they gain returns on their lending. An increase in green loans and deposits can also raise individual awareness of the importance of these financial tools.
Environmental Benefits
An uptick in green loans is projected to surge private funds in green projects, thereby contributing to major reductions in greenhouse gas emissions and preventing natural capital degradation. Moreover, green projects can help cut down energy costs, bolster energy security, revitalize regional economies, and improve resilience in the face of disasters.
Additional Associated Concepts
There are other financial instruments and funds connected to the environment. These include Green Bonds and ESG Fund.
Green Bonds
A green bond is a debt instrument used to raise capital specifically for funding ‘green’ projects. These typically revolve around renewable energy, sustainable water management, clean transportation, and other related fields.
ESG Fund
The term ‘ESG Fund’ is a blend of three words – Environment, Social, and Governance. These funds are a type of mutual fund which is synonymous with sustainable or socially responsible investing.
