Tuesday, August 12, 2008

Investment Climate and revenue sources of renewables

Commercialization of renewable energy sector has drawn significant investment .At the same time,it kept its pace with the growing global concern over climate change. Development of clean energy stands as a priority to both India and the Global institutions and nations.

India is able to install capacity of 10,000 Mw renewable against its potentiality of 80,000 Mw. This indicates the need for important policy changes that non-conventional can be as attractive as the conventional one and attract more investment . In fact there is a growing interest in renewable space on the account of addressing GHG issues on climate change . However , success on renewable space depends on certain critical factors listed below

1.Strong Government Support for the sector
2. Long term stable cash flows
3. Attractive underline power prices
4. Greater understanding of resource,technology and operational issues
5. Increasingly strong project owners

The investment climate for renewable was quite positive and lot of investor is showing interest on it. Project Finance is easily available as Indian Government is giving a strong support on the renewable with his nodal institution Ministry of New and Renewable Energy Sources (MNES) and also through the corporate entity Indian Renewable Energy Development Agency (IREDA). There is also different fnance available starting from Senior debt by clubbing lenders,Junior debt - Mezzanine finance , lease/Tax based finance and PPA structure under market based revenue mechanism. In short there is good investment climate both at regional (state) and National level too.

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