Infrastructure financing firm L&T Infrastructure Finance is shifting focus to funding projects in the

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renewable energy sector in view of the myriad problems affecting the thermal power sector, such as difficulty in getting environmental clearances, coal linkages and access to uninterrupted coal supply.

Projects in the renewable energy sector comprise over 50 per cent of the company’s total exposure to the power sector, company officials said on Monday.

“We have consciously decided to diversify into the renewable energy space due to the various issues affecting the thermal power sector. Loans to solar, hydel and wind energy projects comprise more than 50 per cent of our business now. Only when a thermal power project appears to be absolutely trouble-free, we shall look at it,” said Suneet K Maheshwari, chief executive of L&T Infra Finance.

Out of L&T Infra Finance’s total loan book of Rs 8,790 crore as on September, the majority of the loans of about 36 per cent is to the power sector, followed by those to sectors such as telecom and roads.

Loans to the coal-fired thermal power sector, which constituted 20 per cent of the company’s loan book in the financial year 2010-11, have been brought down to 16 per cent. Meanwhile, lending to the renewable energy sector has grown from 8 per cent of the loan book in 2010-11 to about 18 per cent.

A shift in focus away from thermal plants may also mean the loan book size would shrink. An average thermal power plant with a capacity of 500 mw would require an investment of around Rs 3,000 crore, while the average size of a solar power plant is just about 5 mw and would require an investment of only Rs 60-80 crore.

“A solar plant takes eight to 12 months to get commissioned unlike thermal plants that take years.

Also, there are no hassles of obtaining many clearances or land acquisition troubles in the renewable energy sector. We only have to focus on the technology. We will be able to build our book size by funding more projects in the solar, wind and hydel segments,” said N Sivaraman, president of L&T Finance Holdings.