Developers, manufacturers, investors and other renewable energy industry stakeholders need to know where the next big market is going to be so that they can adjust their business decisions accordingly.

Since 2003, global consultancy Ernst & Young has released its Country Attractiveness Indices, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.

Here is the firm’s assessment of India.

Policy

In September, India’s National Load Despatch Centre conducted a final set of trials before starting a program to issue and trade RECs. It is reported that seven states have already finalized regulations for the trading of these RECs, while nine others have prepared draft regulations, indicating that the country is one step closer to implementing its much-awaited renewable energy incentive scheme. Each REC will represent 1MWh of electricity from renewable sources, with a fixed floor price of INR12,000 (€200, US $265) for solar RECs and INR1,500 (€24, US $33) for non-solar.

Access to finance

The Indian Government is proposing to set up a green bank by utilizing part of the national clean energy fund, expected to generate INR50b (€833m, US $1.1b) annually. The fund will be capitalized through a tax levied as a duty on the excise of domestic and imported coal. The green bank will help fund projects across wind, solar, tidal and other forms of renewable energy.

The state of Maharashtra has announced RE cost incentives in a bid to achieve its target of 3.5GW of power from renewable sources. In respect of wind power projects, the state Government will bear the cost of infrastructure development up to INR0.5m (€8,339, US $11,000) per MW and up to INR3.5m (€58,180, US $77,000) per MW in respect of power distribution costs. For biomass projects, it will reimburse the cost of power distribution up to INR40m (€667,000, US $884,000) per project.

Infrastructure/grid

In September, India's Central Electricity Regulatory Commission reduced the capacity required for hydropower projects and other renewable energy projects to obtain connection to the inter-state grid to 50MW. Projects with installed capacity of less than 50MW can also now seek grid connectivity collectively provided there is an aggregate installed capacity of at least 50MW.

Solar

In Q3, Indian utility NTPC Vidyut Vyapar Nigam Ltd issued a call for tenders for the development of 650MW of solar power capacity, marking the start of the first 1GW phase of the Jawaharlal Nehru National Solar Mission, which aims to connect 20GW of solar capacity by 2022. Most of the 650MW will be for CSP (500MW) with the remainder allocated to PV solar.

In addition to the Solar Mission, operating at a national level, various Indian states are working on independent solar policies. Since the Government of Gujarat launched its solar policy in 2009, 716MW worth of solar power projects have been allocated and Power Purchase Agreements (PPAs) have been signed with 28 companies for the procurement of 420MW of solar power.

More recently, the states of Rajasthan and Madhya Pradesh released their draft solar policies, likely to be finalized shortly. Rajasthan has one of the highest solar potentials in India, and its 2010 draft solar policy targets a solar power capacity of 10GW-12GW over the next 10-12 years.

Wind 

Figures released by the Ministry of New and Renewable Energy (MNRE) indicate that India is likely to miss its new wind power capacity targets for the third year in a row. Only 205MW was installed in the first financial quarter (April-June) compared with the annual target of 2,000MW.

Diversification

India’s renewable energy market is attracting the attention of a number of established companies from a diverse range of sectors, indicating a move by India’s key business players to diversify into the RE sector. It is hoped that this trend highlights the attractiveness and potential of India’s RE market. Besides expecting high returns from the sector, other reasons for diversification include forward integration, the reduction of corporates’ carbon footprint, and derivation of synergies with existing product portfolios.

For more information on renewable energy development in India, contact the report’s authors Sanjay Chakrabarti, Sudipta Das or Jitesh Khatrani