Incentivise PE investment in renewable energy: Study
Government should incentivise private equity investment to attract more players in the country's renewable energy sector, which is facing severe financial crunch, a study conducted by Ernst & Young has said.
By PTI |
NEW DELHI: Government should incentivise private equity investment to attract more players in the country's renewable energy sector, which is facing severe financial crunch, a study conducted by Ernst & Young has said.
"Investment patterns have to be accordingly structured in the renewable space with flexibility in project financing and measurement of Plant Load Factor to attract more investment and induce entry of greater number of players," the joint study conducted by Ernst & Young and PHD Chamber said.
Promotion of renewable space presupposes a steady cash flow and incentivisation that can overcome higher risks, capital costs and longer gestation period involved, making it less attractive for players to step in, it said.
The study also said there should be mechanism for addressing prompt payment for the surplus power fed to the grid to ensure financial security of investors.
While conventional energy sources are able to find solutions to these problems through direct power purchase agreements with industries and other large consumers, this solution is not viable in case of renewable energy, it said.
Connectivity to the grid may also pose a problem on account of remoteness of renewable energy projects. In some states, issues relating to renewable portfolio standards, grid connectivity and corresponding obligations are largely not addressed, the study said.
There is also a need for a flexible regulatory framework at state level to encourage rural electrification through local resources of renewable energy.
"Investment patterns have to be accordingly structured in the renewable space with flexibility in project financing and measurement of Plant Load Factor to attract more investment and induce entry of greater number of players," the joint study conducted by Ernst & Young and PHD Chamber said.
Promotion of renewable space presupposes a steady cash flow and incentivisation that can overcome higher risks, capital costs and longer gestation period involved, making it less attractive for players to step in, it said.
The study also said there should be mechanism for addressing prompt payment for the surplus power fed to the grid to ensure financial security of investors.
While conventional energy sources are able to find solutions to these problems through direct power purchase agreements with industries and other large consumers, this solution is not viable in case of renewable energy, it said.
Connectivity to the grid may also pose a problem on account of remoteness of renewable energy projects. In some states, issues relating to renewable portfolio standards, grid connectivity and corresponding obligations are largely not addressed, the study said.
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There is also a need for a flexible regulatory framework at state level to encourage rural electrification through local resources of renewable energy.
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