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Clean energy investments in India down 53% at USD 6.3 billion in 2012

Mach 28, 2013

In just one year, investment in clean energy initiatives in India has gone down by 52.7% reaching USD 6.3 billion in 2012, which was what wind market alone attracted in 2011.

The investment in wind, however, was reduced to half in the absence of any incentive scheme. Solar business comprising both power production and equipment manufacturing is suffering due to poor policy enforcement.

According to Bloomberg New Energy Finance, investment in the solar energy sector grew by 90% in 2010 to reach USD 5.2 billion in 2011, but it came down drastically to USD 1.7 billion in 2012.

Experts don’t see significant improvement in investment this year. “We might expect investment in the range of USD 7-9.5 billion in clean energy, as the second phase of solar mission is supposed to start this year,” said Ashish Sethia, country manager-India, Bloomberg New Energy Finance.

The government aims for a capacity addition of 10,000 MW of solar power by 2017 under the ambitious Jawaharlal Nehru National Solar Mission. But currently, the capacity stands at mere 1,200 MW.

The government also hopes to sell solar power at the same rate at which conventional power is sold in 4 years from now. The first phase of the solar mission was quite successful, but the second phase is under clouds even before its commencement.

Also, the US has slapped a case in WTO against India’s domestic procurement clause in the solar mission.

With the delay in solar mission and funding related issues, the investment sentiment isn’t that upbeat. Besides with a high borrowing cost in the 13-14% range and no technical requirement for bidding in India, banks consider most of these projects too risky to finance. A policy push is needed and more than that certainty and clarity on the policies and project planning is also required. But with a good track record, wind is expected to perform better than solar.