Ecofy will leverage IFU’s long-term loan facility to expand its rapidly growing loan portfolio for electric vehicles and rooftop solar systems in India.
IFU has provided DKK 90 million in loan finance to Ecofy Finance Private Limited, which is a financial company focused on accelerating the green transition in India.
The company plans to finance over one million electric vehicles and more than 1.5 GW of rooftop solar within the next 6-7 years. This will support decarbonisation of the transportation sector and power consumption of households and small businesses in India. The electric vehicles financed through Ecofy will reduce a range of harmful air pollutants caused by fossil fuel vehicles.
This investment is a pivotal moment for both Ecofy and the green finance ecosystem in India. The long-term capital provided by IFU empowers us to scale our climate-focused lending solutions while breaking down barriers for underserved borrowers. By combining innovative financing models with a strong commitment to sustainability, we aim to enable access to electric vehicles and rooftop solar, and to drive systemic change toward a cleaner, more inclusive economy.
Vibhor Singhal, Investment Manager at IFU, said “IFU is very pleased to support Ecofy in its pursuit to provide accessible climate finance to the masses. This investment aligns well with IFU’s strategy, as India is a core focus country and climate mitigation and access to finance are key impact priorities for IFU.”
High growth in electric vehicles The market for electric vehicles has been subsidised by the Indian government since 2015 but the demand hasn’t reached significant levels until 2021. Now growth is increasing as prices are becoming competitive, especially for two and three-wheeler vehicles. Electric two-wheeler recorded an annual growth of 30 percent while electric three-wheeler (excluding e-rickshaw) sales grew by over 80 percent over last twelve months. Over 1.7 million electric two and three wheelers were sold in India in last twelve months.
Ecofy aims to address the critical last-mile climate finance gap in India’s consumer, transportation and small business sectors. A part of the financing provided by IFU would be directed towards individuals and SMEs, who typically find traditional financing channels less accessible and therefore are largely excluded from acting as green consumers. More people will get access to electric transportation, which has much lower operational costs.
Huge potential for rooftop solar installations The market potential for rooftop solar installations in India is enormous. The country has over 250 million households, which according to the Council on Energy, Environment and Water provide the opportunity to implement 637 GW of solar energy. And just among India’s micro, small and medium enterprises (MSME), the potential according to a report from IEEFA and JMK Analytics is 15 GW.
However, there are several challenges that limit utilisation. This includes low electricity consumption and the lack of access to financing. Ecofy’s financing solutions for households and small businesses will support financing solar systems to tap the market potential for rooftop solar in India.
The financing from IFU, structured as long-term debt capital, is part of the green strategic partnership between India and Denmark, which was established in 2020 when the prime ministers of both nations signed the agreement.
Axis Bank acted as the exclusive financial advisor to Ecofy for the transaction.
Investment Manager
Vibhor Singhal
+45 33 63 75 23
