India Incentivizes Renewables
Earlier this month at the Delhi Sustainable Development Summit 2008, heads of state, ministers, policymakers, corporate leaders, NGO’s and financiers met for three days to address the issue of climate change. During the event, the REEEP South Asia Regional Secretariat organised a workshop to discuss financial risk management in renewable energy and energy efficiency projects. Risk is a major concern for financiers and investors.
The Indian renewable energy sector has shown impressive growth in the last few years and investment in the sector have increased significantly. However, investment still lags behind expectations and market potential is not being fully realised. According to the Government of India’s Ministry of New and Renewable Energy the country’s short term goal is to add approximately 24GW of new capacity from renewables by 2012. Currently installed capacity is about 11 GW. The planned increase in capacity requires more than Euro 3 million in investment.
Mr Creon Butler, UK Deputy High Commissioner, spoke about the UK government’s intent to establish an £800 million environmental transformation fund, which will be made available to developing countries for transition to a low carbon growth path.
Mr. Chadrashekar Iyer, Associate Director, PricewaterhouseCoopers said, “The renewable energy sector in India has been increasing at 20% annually and the annual turnover of the renewables industry is reaching Euro 1.7 billion. Policy and regulatory frameworks are an important factor to promote investment and policies must guide investment into projects that can improve energy production.”
Fuel supply, performance and technology, regulatory and credit risks were some of the major risks identified in the Indian context during the event. In order to address the issue of risk mitigation, the Renewable Energy and Energy Efficiency Partnership (REEEP) recently provided funding to a two year project in India to analyse the risks and barriers facing the renewable energy industry. The project is expected to develop risk management instruments and policy recommendations.
The finance community has shown great interest in the project. Mr Debashish Majumdar, Chairman and Managing Director of the Indian Renewable Energy Agency (IREDA) emphasized the enormous potential of renewable energy and urged the finance community to enable the renewables industry to tap into this potential efficiently.
Dr. Marianne Osterkorn, International Director of the Renewable Energy and Energy Efficiency Partnership (REEEP), underlined the partnership’s commitment to “proactive cooperation with financial institutions and development agencies, and mainstreaming technology transfer into REEEP projects.”
