India: destination for investment in renewable energy
Renewable energy sector to attract more private equity investments
Saturday, Nov 20, 2010
Globally, investment in clean energy has been growing at a compounded annual rate of 36 per cent reaching about $19 billion in 2009.
Separately, a study by the Word Resources Institute recently estimated a renewable energy market of over $2 billion a year in India.
Private equity investors prefer to invest in models that are fundamentally cost competitive rather than those purely driven by incentives, given the lower business risks in the former.
Companies such as Auro Mira Energy, Greenko, Orient Green Power and Green Infra have been cited in the report as some of the IPPs which received funding from investors such as IDFC PE, Axis PE, Baring PE and Global Environment Fund.
According to the report, India is uniquely placed on this count due to the following reasons: one, it has a large domestic market that can provide economies of scale and reduce cost by being a testing ground for technologies that are about to be commercialised. Indian market is viewed to be large, given the abundance of renewable resources, with only 14 per cent tapped so far, according to the Ministry of New and Renewable Energy.
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