# What is the credit enhancement guarantee that the Indian Renewable Energy Development Agency (IREDA) offers on renewable energy project bonds, and can a small firm use it? Canonical: https://senseible.earth/answers/ireda-credit-enhancement-guarantee-for-solar-wind-bonds It is a partial credit guarantee on bonds issued by commissioned grid-connected solar or wind projects. The bond must be at least rupees (Rs) 100 crore with a rating of at least BBB, and the guarantee covers at most 25% of the issue and never more than 20% of project cost. A small firm is unlikely to reach the floor. ## What it is IREDA's Credit Enhancement Guarantee Scheme is described as a non-fund partial credit guarantee instrument. IREDA provides an unconditional and irrevocable partial credit guarantee on bonds that project developers or promoters raise against commissioned and operationally viable renewable energy projects. The stated aims are to lift the credit rating of the bonds, to draw long-tenure funds into renewable energy, and to help developers raise money at a cheaper, stable rate from the bond market. ## Who qualifies - Grid-connected solar or wind projects only. - At least 1 year of operating history after the commercial operation date (COD), on the date of the request. - Minimum average debt service coverage ratio (DSCR) of 1.2. - Minimum bond issue size of Rs 100 crore. - Standalone external credit rating of the project or bond structure of at least BBB, currently valid. - Promoters not on the Reserve Bank of India (RBI) or Credit Information Bureau (India) Limited (CIBIL) defaulters lists, no criminal proceeding pending against them, and the borrower and its subsidiary not on the default list of IREDA, banks or financial institutions. - The money raised through the credit-enhanced bond may be used only to repay existing debt, partly or fully. ## How big the guarantee can be - Up to 25% of the proposed bond issue, and in any case not more than 20% of the total capitalised project cost as per the latest audited balance sheet. - The project the bond proceeds go to should not have a debt to equity ratio above 3:1. - These limits stay subject to IREDA's exposure norms. - The guarantee period is linked to the bond's period. Bonds may run up to 15 years. ## Security and upkeep - Bond investors hold a pari-passu charge with other senior lenders on the issuer's project assets. IREDA's own charge may be subordinated to the bond investors and other senior debt lenders, and ranks pari-passu only to the extent of an invoked guarantee in the cases the document lists. - The bond terms must give a first pari-passu charge on the project's trust and retention account at par with senior lenders. - The borrower renews or reaffirms the bond rating every year and tells IREDA. If any rating agency downgrades the bonds, IREDA may charge an additional guarantee fee. ## Can a small firm use it? My reading: a Rs 100 crore minimum issue means this is a large developer's tool. A small business with a rooftop solar plant on its own roof would not issue a bond of that size. The page is here so you can see what a bond guarantee needs when a lender or an investor mentions one. The fee schedule is printed in the document, priced by rating and bond tenor; this page does not repeat it. ## Example: the two caps on the guarantee - Bond issue Rs 150 crore, capitalised project cost Rs 400 crore: 25% of the issue = Rs 37.5 crore; 20% of cost = Rs 80 crore. The lower cap is Rs 37.5 crore. - Bond issue Rs 100 crore, capitalised project cost Rs 200 crore: 25% of the issue = Rs 25 crore; 20% of cost = Rs 40 crore. The lower cap is Rs 25 crore. Issue sizes and project costs are examples. The document says up to 25% of the issue and in any case not more than 20% of capitalised cost, so the lower of the two caps applies. My reading: with debt held to 3:1, a bond that is part of the project's debt stays under 75% of cost, so 25% of the issue usually comes out as the lower cap. ## What Senseible does here Senseible reads fuel invoices and electricity bills into monthly records. It does not lend, rate bonds or arrange guarantees. - [What SEBI requires of green debt securities](https://senseible.earth/answers/green-debt-securities-sebi-requirements) - [IREDA refinancing: what a project must show](https://senseible.earth/answers/ireda-refinancing-policy-for-commissioned-projects) - [Blended finance for small businesses](https://senseible.earth/answers/blended-finance-for-msmes) - [Green loan schemes for MSMEs](https://senseible.earth/msme-green-loan-schemes) Sources: [IREDA, Financing Norms and Schemes, issue 35, updated up to 01.10.2026: Credit Enhancement Guarantee Scheme for raising bonds towards renewable energy projects (solar and wind)](https://www.ireda.in/IredaWebPortal/documents/loan-products/financing-norms-01-10-2026.pdf) Last reviewed 2026-11-05. Scheme terms are reissued with each issue of IREDA's norms. A bond labelled green in India also falls under the Securities and Exchange Board of India (SEBI) green debt rules, which are a separate matter from this guarantee.