As on March 31, 2012, installed capacity of renewable energy based power generation was 24,503 MW, which is about 12 percent of the total installed capacity of 199,626 MW. The major renewable energy sources (RES) are wind energy, solar energy, biomass & waste energy, and small-hydro energy.
Highlights of the Indian Renewable Energy Market A number of facts and factors make the Indian renewable energy market exciting for entrepreneurs and investors. Here are some highlights:
Government Incentives In the early 1980’s, the Ministry of New and Renewable Energy (MNRE) was established to encourage diversification of the country’s energy supply and to satisfy the increasing energy demand of a rapidly growing economy. The MNRE issued guidelines to all state governments to create an attractive environment for the export, purchase, wheeling and banking of electricity, generated by renewable power projects. Some of the other key incentives provided by the Government of India for the renewable energy industry are:
Renewable energy investment in India was the second fastest-growing among the G-20 in 2011, with investments increasing 54 percent to USD 10.2 billion. Wind resources received 45 percent of the financing (USD 4.6 billion), while 41 percent (USD 4.2 billion) went to solar. This growth propelled the country from the 10th to the sixth place in the G-20; it now ranks fifth in terms of five-year investment growth.
Foreign Direct Investment (FDI)The Indian government allows 100 percent foreign direct investment (FDI) in the renewable energy sector and has put in place favorable policies to attract foreign companies into the sector.
OutlookOutlook Developing renewable energy can help India increase its energy security, reduce adverse impacts on the local environment, lower its carbon intensity, contribute to a more balanced regional development and realize its aspirations for leadership in high-technology industries. According to a KPMG report, India is the third most favoured destination globally, for investments in the renewable energy sector. The report also says that the country will be a major source of new entrants into the sector, after the US and China. The Indian renewable energy market has become increasingly dynamic in recent years as a result of strong natural resources, greater accommodation to international investments and a variety of government incentives. Solar and wind energy will be the major areas to witness overseas investments and acquisitions in the near future.
With all the attractive characteristics and potential stated above, India presents a significant market opportunity for renewable energy firms worldwide. However, these firms will need external guidance and assistance on several strategic and operational aspects before they are in a position to effectively tap into this opportunity.