Acme Solar awarded 50 MW FDRE project by Tata Power

Acme Solar awarded 50 MW FDRE project by Tata Power

Acme Solar, a prominent player in the renewable energy sector, has been awarded a 50 MW Fixed Deposit Renewable Energy (FDRE) project by Tata Power. This strategic partnership underscores the growing importance of long-term debt financing in India's renewable energy sector, amidst rising bond yields and inflationary pressures.

The FDRE project, valued at ₹5 billion ($60 million), is part of Tata Power's broader initiative to achieve its 500 GW non-fossil fuel target by 2030. The company's recent 15-year bond issuance, raising ₹15 billion ($171.4 million) at a 7.65% coupon, highlights the sector's reliance on long-term debt for capital-intensive projects [1].

Acme Solar's project aligns with Tata Power's focus on solar and wind power generation, critical for addressing intermittency in renewable energy. The company's decision to utilize FDRE reflects the sector's preference for stable, long-term financing instruments. This preference is evident in the broader market, where 15-year bonds have become a preferred instrument for capital-intensive projects with stable cash flows [2].

However, the rising yields in the Indian bond market pose a significant challenge. The Reserve Bank of India's (RBI) failed 30-year sovereign green bond (SGB) auction in June 2025, where all bids were rejected due to investor demands for higher yields, signals growing caution among market participants [3]. The absence of a "greenium" in India has further limited incentives for issuers to bear additional compliance costs, complicating the sector's financing strategy [4].

To mitigate these risks, India's renewable energy bond market is maturing through policy interventions and innovative financing structures. The Ministry of Finance's Climate Finance Taxonomy and SEBI's updated ESG disclosure norms aim to standardize green bond definitions and enhance transparency, addressing concerns about greenwashing [5]. Portfolio bundling of assets, such as rooftop solar and e-mobility projects, is emerging as a tool to diversify risk and attract institutional investors [6].

Acme Solar's project exemplifies the delicate balance between securing long-term financing and managing rising capital costs. As India's energy transition accelerates, the ability to innovate in debt structures will determine the sector's capacity to meet its 2030 targets without compromising financial sustainability.

References:
[1] Tata Power Renewable Energy Bonds, FRN 15jun2026, INR [https://cbonds.com/bonds/686971/]
[2] India's Power Grid Corporation 2025 Bond Issuance [https://www.ainvest.com/news/india-power-grid-corporation-2025-bond-issuance-strategic-investment-aaa-rated-infrastructure-debt-2508/]
[3] Green Yields: Recent bond activity in the renewables space [https://powerline.net.in/2025/07/16/green-yields-recent-bond-activity-in-the-renewables-space/]
[4] India’s sustainable debt market tops USD 55.9 billion… [https://www.climatebonds.net/news-events/press-room/press-releases/indias-sustainable-debt-market-tops-usd-55-9-billion-new-mufg-cbi-report-maps-rapid-growth-pathways-2030]
[5] India's Renewable Energy Growth: Solar Power & More [https://www.ibef.org/industry/renewable-energy]
[6] A Comparative Analysis of Green Bonds and Conventional Bonds in India [https://jmsr-online.com/article/a-comparative-analysis-of-green-bonds-and-conventional-bonds-in-india-financial-and-environmental-implications-257]