Strengthening clean energy cooperation between US, India

The United States and India plan to strengthen bilateral technical, financial, and policy support to expand their clean energy manufacturing capacity, the two countries said in a joint statement issued on September 22. Prime Minister Narendra Modi is on a three-day visit to the US from September 21 to 23.

The two nations also intend to enhance cooperation in third countries, focusing on partnerships in Africa. This builds on existing clean energy collaborations between the United States and India, including initiatives launched during Modi’s 2023 visit, the Strategic Clean Energy Partnership led by the US Department of Energy and Indian ministries, technical assistance from US laboratories, and financial platforms such as the Payment Security Mechanism supporting electric bus deployment in India.

A joint US-India partnership aims to establish a resilient, cutting-edge techno-industrial base, centred on innovative clean energy manufacturing techniques, positioning the two countries as leaders in clean economic development, according to the statement.

As part of this effort, the US and India are working to unlock $1bn in new multilateral finance through the International Bank for Reconstruction and Development (IBRD) to catalyse India’s domestic clean energy supply chain. The funds could help expand supply-side manufacturing capacity for key technologies, focusing on solar, wind, batteries, energy grid systems, and high-efficiency air conditioner and ceiling fan components.

The two countries seek to mobilise further financing for priority clean energy sectors, utilising public and private financial tools and pioneering innovative financial vehicles to meet the rising demand for flexible climate finance solutions.

The immediate focus is on investment opportunities to expand manufacturing capacity in specific clean energy supply chains, targeting components such as solar wafers and next-generation solar cells, wind turbine nacelle components, power transmission lines, batteries, EV battery packs, and high-efficiency cooling systems. Collaboration with the private sector is key to identifying opportunities and launching pilot projects, including one in Africa.

This effort builds on partnerships spearheaded by the US Development Finance Corporation (DFC) across solar, wind, battery, and critical minerals sectors. Investments could be channelled through India’s Green Transition Fund, supporting renewable energy and e-mobility, and Eversource Capital’s new $900mn fund for clean technologies such as renewable energy, efficient cooling, and electric transportation.

The US and India also plan to build trilateral relationships with African partners, focusing on solar and battery storage projects. They aim to explore investment opportunities and support solar and EV deployment in Africa, with DFC and the US Agency for International Development collaborating with the India-based International Solar Alliance to develop solar and EV charging networks near health facilities.

Both nations are consulting with industry on policies to boost demand certainty for locally manufactured clean technologies. The US Bipartisan Infrastructure Law and Inflation Reduction Act, as well as India’s Production Linked Incentive Schemes, which have invested over $4.5bn in clean energy manufacturing, provide a foundation. However, additional policies are needed to safeguard and expand these investments amidst global market challenges, ensuring access to input materials, expertise, and finance.