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The effectiveness of federal renewable policies in India

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  • Shrimali, Gireesh
  • Srinivasan, Sandhya
  • Goel, Shobhit
  • Nelson, David

Abstract

The Government of India has set ambitious targets for renewable energy. However, unsubsidized renewable energy is still at least 50% more expensive than fossil fuel power, and requires policy support at federal as well as state levels. In this context, a comparative evaluation of the effectiveness of these policies becomes important. Using financial models, we provide a framework to compare existing federal policies – generation based incentive, viability gap funding, and accelerated depreciation – for wind and solar technologies with a new class of debt-related federal policies. Our main finding is that, debt-related policies offer the most potential for cost-effectiveness in the long-term; they also perform well across other criteria. A particularly attractive policy is reduced-cost, extended-tenor debt which, compared to existing policies, would reduce total subsidies by up to 78%, have 100% viability gap coverage potential, and provide 76% of subsidy recovery.

Suggested Citation

  • Shrimali, Gireesh & Srinivasan, Sandhya & Goel, Shobhit & Nelson, David, 2017. "The effectiveness of federal renewable policies in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 538-550.
    • Handle: RePEc:eee:rensus:v:70:y:2017:i:c:p:538-550
    DOI: 10.1016/j.rser.2016.10.075
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