Renewable energy in India more expensive than US, Europe, surveys find

Dec 6, 2012 - Two recently published studies found that the cost of renewable energy in India is between 24% and 32% higher than in the US and Europe due chiefly to high interest rates and the short term of loans for clean power projects in the country.

One of the reports by the Climate Policy Initiative (CPI) and the Centre for Emerging Markets Solutions (CEMS) at the Indian School of Business (ISB) showed that even if debt costs declined, obstacles such as short loan terms, the difficult access to equity financing, government curbs on foreign debt and other local banking related issues would still hamper renewable energy growth in India in the medium and long term.

The second CPI-ISB report on India’s Renewable Energy Credits market stated that the market was unlikely to achieve the government’s objectives as its performance has been unsatisfactory so far.

The government has set a target of reaching between 4,000 MW and 10,000 MW of renewable energy by 2017 and 20,000 MW by 2022.

Reuben Abraham, executive director at CEMS, said that the financing issues linked to the lack of favourable regulatory framework risk causing India to fall behind on its renewable energy targets despite the country’s rich wind and solar potential.

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