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Meeting India’s renewable energy targets: the financing challenge

India has ambitious goals for renewable energy. This report by the Climate Policy Initiative analyses the challenges for designing national policy that will attract the investment needed to spur rapid growth in wind and solar energy at a reasonable cost. It finds that while there appears to be a reasonable number of investors willing to invest in both debt and equity in renewable energy projects, the cost and terms of the debt available to finance these projects is a major problem, increasing the cost of renewable energy by up to a third compared to similar projects in the United States and Europe. The report suggests policy solutions that could reduce the cost of meeting India’s ambitious targets. It concludes that differences in national financial markets impact renewable energy policy design and effectiveness, and therefore, lessons learned from, and policies developed by, developed economies may not be particularly useful for India given these differences in financial markets.