High interest rates hit renewable energy

Last Updated: Fri, Dec 07, 2012 07:42 hrs

pClimate Policy Initiative CPI a global policy effectiveness analysis and advisory organisation and the Centre for Emerging Markets Solutions CEMS at the Indian School of Business ISB have found that high interest rates and relatively short-term loans for renewable energy projects add 24-32 per cent to the cost of renewable energy in India as compared to similar projects in the US and Europe The CPI-ISB energy and environment programme report titled &lsquoMeeting India&rsquos renewable energy targets The financing challenge&rsquo finds that even if the cost of debt goes down issues with loan terms access to low-cost equity limits on foreign debt and national banking practices are likely to present additional barriers for growth in India&rsquos renewable energy sector in the medium and long-termpp&rdquoThe national government has a goal to reach 4000-10000 Mw of renewable energy by 2017 and 20000 Mw by 2022 Debt market issues make it more expensive for India to meet these goals&rdquo it said In 2011 India launched renewable energy credits a market-based national policy to help the country reach its renewable energy targets more efficiently The CPI-ISB report &lsquoFalling short An evaluation of the Indian renewable certificate market&rsquo finds that the Indian renewable energy certificate market is not likely to achieve government objectivesppThough the design of the renewable energy certificate mechanism appears adequate the performance of the market has been far from satisfactory it says gHigh debt costs common in emerging economies are a potential barrier to the growth of renewable energy CPI is now analysing how other nations have addressed this issueppBrazil&rsquos national development banks has provided low-cost debt to spur these projects forward and may provide some helpful lessons for India&rdquo David Nelson director of CPI said in a release on WednesdayppAccording to Reuben Abraham executive director CEMS ISB India has more than enough wind and solar potential to meet the country&rsquos ambitious targets However he said without policy solutions the country&rsquos financing challenges will force this sector to fall behindp

More from Sify: