Meeting India’s Renewable Energy Targets: The Financing Challenge
December 5, 2012
India has ambitious goals for renewable energy. CPI’s analysis shows that while there appears to be a reasonable number of investors willing to invest in both debt and equity in renewable energy projects, the cost and terms of the debt available to finance these projects is a major problem, increasing the cost of renewable energy by up to a third compared to similar projects in the U.S. and Europe.
Further, we find that even if the cost of debt goes down, issues with loan terms, access to low-cost equity, limits on foreign debt, and national banking practices are likely to present additional barriers for growth in India’s renewable energy sector in the medium and long term. Our report suggests some policy solutions that could reduce the cost of meeting India’s ambitious targets.