India to Lower Risk for Investing in Renewables
New Delhi, 14.02.2008
At last week’s Delhi Sustainable Development Summit 2008, heads of state, ministers, policymakers, corporate heads, NGO's and financiers met for three days to address the issue of climate change. During the event, the REEEP South Asia Regional Secretariat organised a workshop to discuss financial risk management in renewable energy and energy efficiency projects. Risk is a major concern for financiers and investors.
The Indian renewable energy sector has shown impressive growth in last few years and investments into the sector have increased significantly. However, investments into projects still lag behind expectations and market potential is not being fully realised. According to India's Ministry of New and Renewable Energy, the country’s short term goal is to add approximately 24GW of new capacity from renewables by 2012. Current installed capacity is about 11GW. The projected increase in capacity requires more than Euro 3 million in investment.
Mr. Creon Butler, UK Deputy High Commissioner, spoke about the UK government’s intent to establish an 800 million pound environmental transformation fund which will be made available to developing countries for transition to a low carbon growth path.
Mr. Chadrashekar Iyer, Associate Director, PricewaterhouseCoopers (PwC) said, “The renewable energy sector in India has been increasing at 20% annually and the annual turnover of the renewables industry is reaching Euro 1.7 billion. Policy and regulatory frameworks are an important factor to promote investments and policies must guide investments into projects that can improve energy production.”
Fuel supply risks, performance or technology risks, change in policies and tariffs and credit risks were some of the major risks identified in the Indian context during the event. In order to address the issue of risk mitigation, the Renewable Energy and Energy Efficiency Partnership (REEEP) has recently funded a two year project in India to analyse the risks and barriers facing the renewable energy industry. The project is expected to develop risk management instruments and policy recommendations.
The finance community has shown great interest in the project. Mr. Debashish Majumdar, Chairman and Managing Director of the Indian Renewable Energy Agency (IREDA) emphasized the enormous potential of renewable energy and urged the finance community to enable the renewables industry to tap it efficiently.
Dr. Marianne Moscoso-Osterkorn, International Director of the Renewable Energy and Energy Efficiency Partnership (REEEP), underlined the partnership’s commitment to “proactive cooperation with financial institutions and developmental agencies, and mainstreaming technology transfer into REEEP projects.”