INDIA'S RENEWABLE ENERGY FINANCE: A DECADE OF TRANSFORMATION AND FUTURE HORIZONS
Priyanka Kumari
Over the past decade, the evolution of renewable energy finance in India has been marked by substantial growth and innovation, driven by supportive government policies, market dynamics, and technological advancements. The allocation for the new and renewable energy sector surged by 99 percent, rising to Rs 10,222 crore in 2023 from Rs 956 crore in 2014-15. Since 2013-14, India's installed capacity for pure renewable energy (excluding hydropower) has nearly quadrupled, growing from 28 GW in 2013-14 to 132 GW currently.
Central to this progress have been government initiatives like the National Solar Mission and the National Wind Energy Mission, which set ambitious capacity targets and fostered a conducive policy environment. Financial incentives such as subsidies, feed-in tariffs, tax benefits, and accelerated depreciation have significantly reduced entry barriers and boosted investment attractiveness. These policies have also driven down costs for solar and wind power, bringing them closer to grid parity and enhancing investor confidence.
The private sector has played a crucial role, with increased investments from both domestic and international players. This surge has been supported by a robust regulatory framework and mechanisms like renewable purchase obligations (RPOs) and competitive bidding, which have ensured transparency and efficiency. Additionally, the advent of green bonds and other innovative financing instruments has expanded the capital available for renewable projects, enabling large-scale deployments. International cooperation has further bolstered India's renewable energy finance landscape. Initiatives like the International Solar Alliance have attracted global investments, facilitated technology transfer, and promoted capacity building, accelerating cost reductions and making renewable energy more economically viable.
Despite facing challenges such as policy uncertainty, grid integration issues, and land acquisition hurdles, the commitment of the Indian government and the growing involvement of financial institutions and the private sector provide a strong foundation for overcoming these obstacles.
Recognizing that renewable energy alone cannot fully meet India's energy needs, the central government has ventured into new energy sources such as green hydrogen. On January 4, 2023, the Union Cabinet approved the National Green Hydrogen Mission (NGHM) with an initial budget of Rs 19,744 crore, of which Rs 17,490 crore is allocated for incentives. The NGHM aims to produce at least 5 million metric tons of green hydrogen annually by 2030, necessitating 60-100 GW of electrolyser capacity and 125 GW of renewable energy.
Over the past decade, the evolution of renewable energy finance in India has been marked by substantial growth and innovation, driven by supportive government policies, market dynamics, and technol...