Tata Cleantech Capital Limited

South Asia Infrastructure

Tata Cleantech Capital Limited (TCCL) is a Tata Group Non-Banking Finance Company (NBFC) in India.

Our investment

CDC’s $30 million directed lending facility to Tata Cleantech Capital Ltd. (TCCL) is expected to (1) avoid greenhouse gas emissions by increasing deployment of energy efficiency and e-mobility solutions to support climate change mitigation; and (2) reduce freshwater consumption by increasing deployment of water efficiency and wastewater treatment projects to reduce water stress for consumers and ecosystems. The facility is also expected to support the sustainable development of resource efficiency sectors in India by helping demonstrate the bankability of resource efficiency financing.

Impact
  • Avoid greenhouse emissions through increased efficiency and sustainability of energy consumption (SDG targets 7.3 and 13A).
  • Reduce freshwater consumption through increased efficiency and sustainability of water-use and wastewater management (SDG targets 6.3, 6.4 and 12.2).
Primary Secondary
  • Direct: Provide debt financing to increase deployment of energy efficiency and e-mobility solutions to reduce consumption of fossil fuels and therefore greenhouse gas emissions.
  • Direct: Provide debt financing to increase deployment of water efficiency and wastewater treatment solutions to reduce freshwater consumption and therefore improve the sustainability of water resource management.

Catalysing markets: Support the sustainable market development of energy efficiency, water efficiency and e-mobility sectors in India by helping demonstrate the bankability of resource efficiency projects.

Stakeholder Geography Characteristics
Planet

Global

N/A

Consumers

India; state variable depending on final use of proceeds.

Assuming a 33 per cent split of proceeds to water efficiency, we expect CDC’s directed lending facility could finance sufficient capex to cumulatively avoid c. 6.39 million m3 per year of freshwater consumption over eight years.

Scale Depth/Duration
  • Planet (related to energy efficiency/e-mobility activity): Assuming a 33 per cent split of proceeds each to energy efficiency and e-mobility segments, we expect CDC’s directed lending facility could finance sufficient capex to cumulatively avoid c. 58,000 tonnes of CO2 per year over eight years. The majority (more than 90 per cent) of this impact is expected to come from energy efficiency, with the balance from e-mobility sub-projects such as electric vehicle fleet rollout.
  • Consumers / planet (related to water efficiency and wastewater treatment activity): Expected to be deep as 54 per cent of India is classified as severely water-stressed and supply is projected to fall 50 per cent short of demand by 2030. Impact is generally expected to be deeper for projects in northern and western states where baseline water stress is highest and therefore freshwater availability the scarcest.

Market-catalysing impact is expected across the three segments but is likely to be deeper for e-mobility, which is the most nascent subsector of the three. In 2018, electric vehicle penetration was 0.1 per cent of the market and just c. 100 charging stations existed across India.

Grid Score Contribution

This investment is made under an approved Catalyst Strategy, and therefore does not require a grid score.

To help us direct our investments, we use a tool called the Development Impact Grid. The Grid scores every investment we plan out of a score of four, based on two factors: the difficulty of investing in the country and whether investment in that sector will lead to jobs.

  • Financial: The commercial market does not offer capital in sufficient quantities to meet the company's plans / needs. CDC’s facility is unique in directing funding for nascent resource efficiency sectors, which should accelerate the speed, scale and tenor of TCCL’s loan deployment in these sectors.
  • Value-add: CDC will provide technical assistance support to implement a monitoring and measurement framework for resource efficiency sectors to track impact and the underlying borrower level.
Risk
  • Execution: Relates to the risk of being unable to fully deploy the facility or that end-borrowers will fail to successfully implement resource efficiency projects, given these are nascent sectors that are still gaining traction in the market. This is correlated with commercial risk and subject to the same mitigants.
  • Alignment: Relates to the risk of proceeds not being on-lent toward target subsectors as intended. Considered low given disbursement mechanisms built into the facility.
  • Evidence: Relates to the risk that there is insufficient data to monitor and measure downstream impacts (climate-related and market-level) that will occur, as CDC is not lending directly to end-borrowers. This includes capturing potential second-order impacts related to economic opportunities for employees created through cost savings realised by end-borrowers, for which there is currently insufficient evidence to include as an impact pathway. We aim to mitigate this through the implementation of a monitoring and measurement framework with TCCL as part of CDC’s value-add.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
South Asia
Countries:
India
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Infrastructure
Website:
http://www.tatacleantechcapital.in/
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Direct Debt
Start date

For direct investments, this is the date CDC committed capital to the business or project.

For funds, this is the date that CDC committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
December 2020
Amount

For direct investments, this is the total amount that CDC has committed to the business or project (it may be a combination of equity and debt).

For funds, this is the total amount that CDC has committed to the fund.

:
$30m
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
India