Annex D. Concept note: Blended Finance Facilities for Offshore Wind & Green Hydrogen

Blended finance has mobilized approximately $171 billion in capital towards sustainable development in developing countries to-date (Convergence, 2021[1]). In accordance with OECD definitions,1 blended finance structures can involve concessional funding from public or philanthropic sources mobilising private capital for projects that cannot raise commercial finance on their own,2 primarily because perceived and real risk are too high for private investors. Governments (including development co-operation agencies) represent close to 69% of the total capital in blended finance funds and facilities, and MDBs are the second largest source of capital (Dembele et al., 2022[2]).

Establishing sectoral blended finance facilities for (a) offshore wind and (b) green hydrogen in India could allow various organisations to invest alongside each other while achieving their own objectives. In particular, these facilities could be integrated in development strategies and sector investment plans of the Government of India, with the ultimate goal to lower the levelized cost of clean energy and develop self-sustaining private investment market.

The blended finance facilities should provide a limited window of concessionality to serve the first few gigawatts until a target cost of energy is achieved, with the objective of lowering risks and the cost of capital to build self-sustaining private investment markets. To this end, the facilities would channel funds from domestic and international donors and financial institutions. Blended Finance facilities can be supported by broader activities, such as the identification of projects (e.g. through the National Infrastructure Pipeline), or the development of knowledge and training resources for offshore wind and green hydrogen.

While detailed needs assessment must be undertaken, this concept note outlines the key elements to address in the process of designing and setting up such facilities.3

In the context of over-stretched public finances post the COVID-19 pandemic, the facility should target high impact for every rupee of public finances spent, which is key for highly capital-intensive sectors like offshore wind and green hydrogen, where around USD 100 billion investments would be needed to build 37 GW of offshore wind, and a similar amount to develop 5 million tonnes of green hydrogen, as per the targets announced by the Government of India.

Salient risk areas of offshore wind and green hydrogen could be addressed through the blended finance facility. While such a facility would be capable of channeling finance for all parts of the value chain, it would be particularly impactful and would facilitate co-ordination between donors if it focusses on one single and well-defined area. Both for an offshore wind blended finance facility and for a green hydrogen facility, financing infrastructure upgrades could have a large impact. Indeed, transmission system upgrades typically represent 15-20% of the offshore wind project CAPEX. Similarly, developing green hydrogen projects also involves building storage, transport and distribution infrastructure, which can be optimised by investing in hydrogen hubs, for instance by building common user infrastructures. Improving these costs can bring down cost of energy through lower tariffs and build a robust business case for further investments. In India, it has already been announced that transmission network connections for the initial stage of offshore wind project development will be provided by the government.

Given the scale of capital required to finance investments in offshore wind and green hydrogen, the development finance funds of the blended finance facility should be used wisely. In these circumstances, the need for concessionality should be assessed in ad hoc business and financial models, to ensure that de-risking, e.g. through guarantees, is prioritised to mobilise capital from private sources. Blended finance can use a wide array of instruments (see Figure A D.1), with various levels of concessionality. As blended finance interventions should focus on where the business case for development is close to commercial maturity, this assessment could confirm the selection of the steps of the value chain where the blended finance facility would have the highest impact for offshore wind and green hydrogen.

There exist several common structures for blended finance vehicles (see Figure A D.2). The selection of one of these archetypes, or the design of a different structure, will depend on the market failures that must be addressed. The four archetypes are not mutually exclusive and a combination of these could be warranted.

While establishing the facility specifically for India, would provide certain advantages, there is scope to explore synergies with a global blended finance facility for offshore wind currently being developed by the World Bank, or similar funds that could be developed for green hydrogen.

Establishing a national facility could lead to a faster and more flexible implementation, as the Government of India – possibly through its agencies – would hold ownership of the process. As India is an attractive market for foreign investors and was the largest recipient of investment in blended finance in 2020, it could be possible to reach sufficient scale even with a national facility. Yet, an international facility would allow climate finance to be more easily and widely accessible, possibly through an existing fund to keep transaction costs low and could be more attractive for MDBs, as it would enable them to use a single vehicle covering several countries.

In the case of a national facility, the blended finance facility in India could be built on the concept of the Green Window that was proposed by IREDA in 2019 (PIB, 2019[4]) but was put on hold due to the pandemic related priorities.4 Public concessional funding for the facility could be channeled by various state or finance ministries to designated implementing agencies such as NIIF and IREDA.


[1] Convergence (2021), Blended Finance, (accessed on 11 September 2022).

[2] Dembele, F. et al. (2022), “Blended finance funds and facilities: 2020 survey results”, OECD Development Co-operation Working Papers, No. 107.

[3] OECD (2022), “OECD blended finance guidance for clean energy”, OECD Environment Policy Papers, No. 31, OECD Publishing, Paris,

[4] PIB (2019), IREDA to Create a Green Window for Green Energy Finance: Shri Anand Kumar, (accessed on 11 September 2022).


← 1. Blended finance is the strategic use of development finance for the mobilisation of additional finance towards sustainable development in developing countries.

← 2. Blended Finance can also cover grants for project preparation and project structuring

← 3. A comprehensive generic guidance on blended finance can be found on:

← 4. For more information on the Green Window concept, see:

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