Greening India’s Homes & Vehicles With Low-Cost Finance
[Editor’s note: It is good to remember that because many places, such as many parts of India, are behind in development, they are able to develop green infrastructure at a point before more damage is done. This is the one blessing of underdeveloped countries. As they play catchup in development, they can start more originally with green development.]
By RMI India
Pursuing low-carbon development is central to India’s Paris Agreement climate goals. In this pursuit, net-zero energy buildings (NZEBs) and electric vehicles (EVs) are the two high-leverage areas. The ability to deliver vast emissions reductions across rural and urban settings has brought NZEBs and EVs to the center of the climate change mitigation agenda. In the Indian context, vehicles and homes also have the distinction of being the two most important purchases consumers make.
Once purchased, assets such as gasoline-powered cars and energy-guzzling homes can be hard for consumers to change, thereby locking in emissions for several decades. Getting it right the first time thus proves especially important.
Lower operational costs for adopters are one of the key advantages of both EVs and NZEBs. However, the upfront cost of both NZEBs and EVs remains a barrier, stalling mass adoption. Price-conscious Indian consumers naturally ask: Who will pay for the gap between conventional and greener alternatives?
Central and state subsidies are already playing a role in bridging the cost premium between vehicles running on gas/diesel and EVs. Buildings certified under various rating programs such as the Indian Green Building Council (IGBC) and Green Rating for Integrated Habitat Assessment (GRIHA) are increasingly being allocated incentives by different government entities. In both cases, this government assistance has helped create momentum. However, there exists an oft-overlooked opportunity to reduce the cost premium and improve the attractiveness of both EVs and NZEBs — retail finance.
Retail Finance Can Improve Affordability, Awareness, and Adoption
Retail finance is a key driver of economic growth. Access to credit (in the form of mortgages and loans) has made homes and vehicles more affordable, enabling millions of first-time buyers.
In March 2021, the outstanding housing loans in India amounted to US$298 billion and vehicle loans to US$61.7 billion. Retail banking overall forms a fifth of all bank credits (not including the non-banking financial companies or NBFCs). This large market size is indicative of the influence that financial institutions (FIs) can have on transitioning India’s vehicle and housing stock to greener alternatives.
Dedicated “green” loans or mortgages with affordable interest rates and long tenures can help borrowers spread cost premiums across time. Lower operational costs of EVs or NZEBs improve the ability of the borrower to afford equated monthly installments. This reduces the probability of default, creating a win-win scenario for both the FI and the borrower.
The mortgage example structure in Exhibit 1 shows how a green building can make ownership affordable for the borrower while realizing higher incomes for a bank. Longer tenures can be even more advantageous for both.
Exhibit 1: Green mortgage illustrative example for first year (in $). Source: Modified from IFC, 2019
Affordability is only part of the possible impact. FIs also have the potential to enhance consumer awareness. Commercial banks and NBFCs are in regular contact with individuals interested in purchasing new assets. This channel can be instrumental in communicating the financial benefits of EVs or NZEBs and busting myths on ownership. The resulting behavioral change on purchase decisions has the potential of raising the aspirational value and desirability of green assets. Hence, by improving affordability and awareness, FIs can help scale adoption.
Solutions Exist but Risks Need to Be Overcome
Dedicated green loans and mortgages are not new inventions. In India, too, a few forward-thinking FIs have started developing these products. For example, the State Bank of India has launched a Green Car Loan, whereas the National Housing Bank’s SUNREF India program is facilitating affordable green housing credit worth ₹800 crore (US$107 million) in India.
Replicating such products across the retail finance ecosystem requires us to consider current barriers. Unique challenges exist: For EVs, the lack of secondary market is a concern. Meanwhile for NZEBs, developers lack incentives to construct property where operational benefits will pass on to the occupant. However, many risks are common. In both cases, unproven asset value, low awareness of techno-economics, and an uncertain policy environment are seen to be holding back finance.
Moving forward, overcoming these barriers will be important for unlocking the opportunity inherent in greening retail finance. Building the capacity of FIs for developments in EVs and NZEBs will be needed to maximize the potential of dedicated loan or mortgage products. Another common area that needs to be prioritized is data availability on loan performance of EVs and NZEBs. To this end, the Reserve Bank of India (RBI) can designate green assets such as EVs and NZEBs as financial reporting sub-sectors.
Also, the RBI can consider the creation of a sustainable finance taxonomy by setting baselines and definitions for green assets. This will help develop insights into existing green financial products and direct finance to the most effective technologies.
The vehicle and housing finance industries can simultaneously learn from each other. For example, the Government of India’s Partial Risk Sharing Facility for Energy Efficiency is a promising instrument enabling FIs to lend to energy-efficient projects. Risks of financing energy service companies wishing to retrofit buildings are partially covered under this facility, reducing overall transaction costs. Such risk-sharing programs need to be introduced for EVs as well to improve the lending confidence of FIs.
For EVs, partnerships between FIs and manufacturers help mainstream low-cost financing. Developer-FI partnerships for net-zero energy housing similarly need to be scaled. IIFL Home Finance is an FI already piloting green certification and lending programs with local developers in Indian cities. Providing technical assistance and data-driven support to the value chain is helping develop a pipeline of NZEBs.
Governments can enable more such partnerships by offering interest rate subventions, stamp duty reductions, and incentives for longer tenures. Creating a shared roadmap for the development of NZEBs will additionally provide direction to the entire ecosystem.
Financial Institutions that Take the Lead, Can Reap the Rewards
For EVs alone, the cumulative capital investment required by the end of the decade could be as much as US$266 billion (see Exhibit 2). This translates to a loan market of US$50 billion in 2030. Similarly, estimates suggest a US$1.25 trillion investment opportunity in green housing by 2030. FIs that champion green loans and mortgages and proactively enable the market stand to gain the most in these scenarios.
Exhibit 2: Cumulative capital cost of India’s EV transition, 2020–2030, including EVs, batteries, and electric vehicle supply equipment. Source: NITI Aayog and RMI, 2021
Energy transition-related risks will also make EVs or NZEBs more worthwhile to lend to in the near-term. Many of the gas/diesel vehicles that FIs are financing today will start to lose their value as the upfront cost of EVs decreases, emission norms are tightened, and fuel prices increase.
Similarly, as the Energy Conservation Building Code for residential buildings is notified across India and incentive structures are enhanced, the possibility of stranded real estate assets may increase. Resilience and energy cost volatility risks should also be considered.
The RBI has already begun to commit to climate action: in April 2021, it joined the Network for Greening the Financial System, a green finance coalition for central banks. This commitment signals the inevitability of green finance in India, of which green lending will be an essential part. Most recently, the Climate Finance Leadership Initiative’s launch in India is demonstrative of the financial potential to accelerate mass consumer adoption of green assets such as EVs and NZEBs, leading the country closer to Paris Agreement goals. With the stage being set, now retail finance must step up.
Featured image courtesy of Blu Smart, Move for Change.
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Japanese equipment giant Kubota brought 22 new or updated machines to the 2025 bauma expo earlier this year, but tucked away in the corners was a new retrofit kit that can help existing customers decarbonize more quickly, and more affordably.
No matter how badly a fleet may want to electrify, harsh economic realities and the greater up-front costs typically associated with battery electric remain high hurdles to overcome, but new retrofit options from major manufacturers are popping up to help lower those obstacles.
The latest equipment maker to put its name on the retrofit list is Kubota, who says its kit can be installed by a trained dealer in a single day.
That’s right! By this time tomorrow, your diesel-powered Kubota KX019 or U27-4 excavator (shown) could be fitted with an 18 or 20 kWh li-ion battery pack and electric drive motors and ready to get to work in a low-noise or low-vibration work environment where emissions are a strict no-no. Think indoor precision demolition or historic archeological excavation.
Then, if necessary, it can go right back to diesel power.
From diesel to electric and back again
If that sounds familiar, that’s because we’ve talked about a similarly flexible power solution from ZQUIP. The battery packs and diesel engines are much larger in that application, but the basic sales pitch remains the same: electric when it benefits your operation, diesel it doesn’t.
Kubota says its modular retrofit kits is a response to the increasing global demand for sustainable alternatives by focusing on making machinery that’s flexible and repairable enough to be “reusable,” and offer construction fleet managers a longer operational lifespan, superior ROI (return on investment), and lower TCO (total cost of ownership) than the competition.
Kubota’s solution also notably reduces maintenance costs and operational overheads. With no engine and associated components, servicing time and expenses are considerably reduced, saving customers both time and money. Additionally, with electricity costing far less than fossil fuels, it offers a highly economical advantage.
International Rental News reports that other changes to the excavators include a more modern cab controls with a digital instrument cluster, a 60 mm wider undercarriage for more stability, and an independent travel circuit allows operators to use the boom, dipper, bucket, and auxiliary functions without an impact on tracking performance.
Kubota’s new kit, first shown at last year’s Hillhead exhibition in the UK, will officially be on sale this summer – any day now, in fact – though pricing has yet to be announced.
Electrek’s Take
If you’re wondering how it is that we’re still talking about bauma 2025 a full quarter after the show wrapped up, then I haven’t done a good enough job of explaining how positively massive the show was. Check out this Quick Charge episode (above) then let us know what you think of Kubota’s modular power kits in the comments.
SOURCE | IMAGES: Kubota, via International Rental News.
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Elon Musk isn’t happy about Trump passing the Big Beautiful Bill and killing off the $7,500 EV tax credit – but there’s a lot more bad news for Tesla baked into the BBB. We’ve got all that and more on today’s budget-busting episode of Quick Charge!
We also present ongoing coverage of the 2025 Electrek Formula Sun Grand Prix and dive into some two wheeled reports on the new electric Honda Ruckus e:Zoomer, the latest BMW electric two-wheeler, and more!
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Environment
FERC: Solar + wind made up 96% of new US power generating capacity in first third of 2025
Solar and wind accounted for almost 96% of new US electrical generating capacity added in the first third of 2025. In April, solar provided 87% of new capacity, making it the 20th consecutive month solar has taken the lead, according to data belatedly posted on July 1 by the Federal Energy Regulatory Commission (FERC) and reviewed by the SUN DAY Campaign.
Solar’s new generating capacity in April 2025 and YTD
In its latest monthly “Energy Infrastructure Update” report (with data through April 30, 2025), FERC says 50 “units” of solar totaling 2,284 megawatts (MW) were placed into service in April, accounting for 86.7% of all new generating capacity added during the month.
In addition, the 9,451 MW of solar added during the first four months of 2025 was 77.7% of the new generation placed into service.
Solar has now been the largest source of new generating capacity added each month for 20 consecutive months, from September 2023 to April 2025.
Solar + wind were >95% of new capacity in 1st third of 2025
Between January and April 2025, new wind provided 2,183 MW of capacity additions, accounting for 18.0% of new additions in the first third.
In the same period, the combination of solar and wind was 95.7% of new capacity while natural gas (511 MW) provided just 4.2%; the remaining 0.1% came from oil (11 MW).
Solar + wind are >22% of US utility-scale generating capacity
The installed capacities of solar (11.0%) and wind (11.8%) are now each more than a tenth of the US total. Together, they make up almost one-fourth (22.8%) of the US’s total available installed utility-scale generating capacity.
Moreover, at least 25-30% of US solar capacity is in small-scale (e.g., rooftop) systems that are not reflected in FERC’s data. Including that additional solar capacity would bring the share provided by solar + wind to more than a quarter of the US total.
With the inclusion of hydropower (7.7%), biomass (1.1%), and geothermal (0.3%), renewables currently claim a 31.8% share of total US utility-scale generating capacity. If small-scale solar capacity is included, renewables are now about one-third of total US generating capacity.
Solar is on track to become No. 2 source of US generating capacity
FERC reports that net “high probability” additions of solar between May 2025 and April 2028 total 90,158 MW – an amount almost four times the forecast net “high probability” additions for wind (22,793 MW), the second-fastest growing resource. Notably, both three-year projections are higher than those provided just a month earlier.
FERC also foresees net growth for hydropower (596 MW) and geothermal (92 MW) but a decrease of 123 MW in biomass capacity.
Taken together, the net new “high probability” capacity additions by all renewable energy sources over the next three years – i.e., the bulk of the Trump administration’s remaining time in office – would total 113,516 MW.
FERC doesn’t include any nuclear capacity in its three-year forecast, while coal and oil are projected to contract by 24,373 MW and 1,915 MW, respectively. Natural gas capacity would expand by 5,730 MW.
Thus, adjusting for the different capacity factors of gas (59.7%), wind (34.3%), and utility-scale solar (23.4%), electricity generated by the projected new solar capacity to be added in the coming three years should be at least six times greater than that produced by the new natural gas capacity, while the electrical output by new wind capacity would be more than double that by gas.
If FERC’s current “high probability” additions materialize, by May 1, 2028, solar will account for one-sixth (16.6%) of US installed utility-scale generating capacity. Wind would provide an additional one-eighth (12.6%) of the total. That would make each greater than coal (12.2%) and substantially more than nuclear power or hydropower (7.3% and 7.2%, respectively).
In fact, assuming current growth rates continue, the installed capacity of utility-scale solar is likely to surpass that of either coal or wind within two years, placing solar in second place for installed generating capacity, behind only natural gas.
Renewables + small-scale solar may overtake natural gas within 3 years
The mix of all utility-scale (ie, >1 MW) renewables is now adding about two percentage points each year to its share of generating capacity. At that pace, by May 1, 2028, renewables would account for 37.7% of total available installed utility-scale generating capacity – rapidly approaching that of natural gas (40.1%). Solar and wind would constitute more than three-quarters of installed renewable energy capacity. If those trend lines continue, utility-scale renewable energy capacity should surpass that of natural gas in 2029 or sooner.
However, as noted, FERC’s data do not account for the capacity of small-scale solar systems. If that’s factored in, within three years, total US solar capacity could exceed 300 GW. In turn, the mix of all renewables would then be about 40% of total installed capacity while the share of natural gas would drop to about 38%.
Moreover, FERC reports that there may actually be as much as 224,426 MW of net new solar additions in the current three-year pipeline in addition to 69,530 MW of new wind, 9,072 MW of new hydropower, 202 MW of new geothermal, and 39 MW of new biomass. By contrast, net new natural gas capacity potentially in the three-year pipeline totals just 26,818 MW. Consequently, renewables’ share could be even greater by mid-spring 2028.
“The Trump Administration’s ‘Big, Beautiful Bill’ … poses a clear threat to solar and wind in the years to come,” noted the SUN DAY Campaign’s executive director, Ken Bossong. “Nonetheless, FERC’s latest data and forecasts suggest cleaner and lower-cost renewable energy sources may still dominate and surpass nuclear power, coal, and natural gas.”
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