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The Parliamentary Standing Committee on Energy in its report has asked the government to explore new and innovative tools to deal with the issue of financial constrains in the renewable energy sector, including setting up of green banks and introduction of renewable finance obligation for financial institutions, among others. It said since Green Banks have emerged as an innovative tool for accelerating clean energy financing globally, the government should explore setting up of a green bank system which can address the persisting finance related challenges being faced by the renewable energy sector in the country.

Keeping in view that the overall debt requirement is large and reducing the cost of financing to the renewable energy developers is important, a parliamentary panel also suggested that the Ministry of New and Renewable Energy (MNRE) may explore the possibility of prescribing Renewable Finance Obligation on the lines of Renewable Purchase Obligation (RPO) for banks and financial institutions. It said the Renewable Finance Obligation will make them invest a specific percentage of their investment in the renewable energy sector.

It also suggested that the ministry should work proactively to make available and explore innovative financing mechanisms and alternative funding avenues like Infrastructure Development Fund (IDF), Infrastructure Investment Trusts (InVITs), Alternate Investment Funds, Green/Masala Bonds, crowdfunding etc for the renewable energy sector. It noted that under India's long term commitments, an additional investment of about Rs 17 lakh crore has been envisaged, which would include associated transmission costs. The country would need an annual investment of Rs 1.5 - 2 lakh crore in renewable energy sector, against which the estimated investment for the last few years have been in the range of Rs 75,000 crore only.

It also suggested that IREDA (Indian Renewable Energy Development Agency) should be given a special window for borrowing from the RBI at repo rate in line with other specialised financial institutions like NHB, SIDBI and NABARD to ensure availability of low-cost financial resources for the renewable energy sector. Besides, it suggested that the ministry should pursue the banks which provide funds to renewable energy sector to restructure the loans in such a way that the EMI is kept higher in peak season of revenue generation and lower in the off-season.