Financing Renewable Energy in India: A Review of Current Status and Recommendations for Innovative Mechanisms
India set the aggressive goal of 15 percent of power consumption to be RE-generated by 2022, up from current levels of 5 percent (2013). Gaps in the India RE sector are emerging including lack of financing sources participating in RE Investments; tax benefits are not uniformly accessible; capital market access has been limited; private equity is tapering off as there are limited exit opportunities; and many banks are reaching their lending limits for RE.
Excerpt from the report:
Based on research and inputs from stakeholders, the key needs identified to help scale up RE financing in India are as follows:
- New financial approaches that can help independent power producers (IPPs) scale up development of RE projects
- Increased availability of financial products suitable to each stage of a project's development (e.g. pre-construction, construction, post commissioning, etc.) This eases migration from one type of financing to the next as risks are reduced.
- Appropriate policies, so that all classes of investors can benefit from incentives such as accelerated depreciation, tax holidays, RECs, and subsidies.
- Institutional arrangements and policies to help RE services companies (RESCOs) access capital from new sources and scale up operations.
- Mechanisms and products to reduce risks of RE investments.