Why support this project?
Aligned with Rajasthan’s ambitious Renewable Energy Policy of 2023, which aims to achieve 65 GW of solar capacity and 15 GW of wind-solar hybrid capacity by 2030, this project supports the state’s vision of transforming its renewable energy landscape. This shift is a substantial leap from the previous target of 30,000 MW solar and 3,500 MW hybrid power set for 2024-25. Rajasthan’s untapped wind energy potential, estimated at an impressive 284 GW at a hub height of 150 meters, provides a fertile ground for such projects to thrive.
In addition to expanding Rajasthan’s clean energy portfolio, the project will direct 2% of its Certified Emission Reduction (CDM) revenue toward sustainable community initiatives, enhancing local infrastructure and services. Local communities will see new job opportunities and improved energy security, creating a shared path toward a sustainable, resilient future for Rajasthan.
Real and Lasting Impact:
Permanence: Project activities must represent permanent reductions in GHG emissions. These renewable wind energy projects avoid emissions by displacing grid energy supply from fossil fuel generation sources. Avoided emissions are considered permanent.
Additionality: A project is additional if the GHG emissions reductions would not occur without the intervention of the project activity. The project’s additionality was proven using a tool designed to assess whether a project is truly necessary to receive CDM support. Following this tool’s guidelines, an Investment Analysis was performed to see if the project would be financially viable on its own. Here, the project used the post-tax Project IRR (Internal Rate of Return) as a key financial measure.
The project compared its IRR to a benchmark set by the Power Finance Corporation’s lending rate for electricity projects, which was 11.75%. After a sensitivity analysis, the Project IRR was found to be 7.15% for a 7-year loan period, well below the benchmark. Even under different scenarios, the IRR stayed below the benchmark, indicating that the project would not be financially appealing without CDM support.
A common practice analysis further confirmed that this project is unique in approach and not commonly implemented. In summary, this project qualifies as additional and therefore merits Climate Finance.
Leakage: In the context of renewable energy projects, leakage refers to the risk that the establishment of the project will generate measurable emissions increases outside the project area. Emissions leakage is very unlikely to occur due to the nature of displacing electricity and avoiding GHG emissions which would have otherwise been generated by fossil fuel sources. As such, renewable energy projects are considered to have negligible leakage risk.
SDGs: The project meets the following United Nations Sustainable Development Goals:
