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Meeting India’s Renewable Energy Targets: The Financing Challenge

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David Nelson, Gireesh Shrimali, Shobhit Goel, Charith Konda, Raj Kumar
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This report addresses India's financing challenges with regard to their ambitious national renewable energy goals. With a focus on the solar PV and wind markets, the authors conduct detailed financial modeling as well as qualitative interviews to determine potential financing challenges in the short and medium-to-long terms. In the short-term, the analysis finds that while the cost and availability of equity are not a major problem, the high cost of debt due to general conditions of the Indian financial market is the most pressing renewable energy finance challenge. In the medium-to-long term, the challenges to renewable energy finance also revolve around debt. The authors find that the availability of debt may decline; government borrowing and regulations may keep interest rates high, even if the cost of debt decreases, less favorable loan terms may become a challenge; and low-cost equity may become less available due to less debt available for leveraging projects in operation and higher desired return on equity. The report proposes several solutions to address these challenges and help India reach its renewable energy goals.