Renewable Energy Market - India

The market in India for the RE business is estimated at $500 million and is growing at an annual rate of 25%. This growth is expected to continue in the coming years as stricter environmental norms and regulatory pressure is placed on Indian industries. The investment in RE is estimated to about $3 billion.

Best prospects in sub-sectors that continue to show a high growth rate and are expected to drive the RE market includes:

Solar Energy:

The solar energy market potential is huge. Only a fraction of the aggregate solar energy potential is thus far being used. Processed raw material for solar cells, large capacity SPV modules, SPV roof tiles, inverters, charge controllers all have good market potential in India as do advanced solar water heaters, roof integrated solar air heaters; and solar concentrators for power generation (above 100 KW).

Wind Energy:

India has a potential capacity of over 40,000 MW, however, thus far only 1700 MW or 2.8 percent of the of India’s potential is being generated. India is implementing the world’s largest wind resource assessment program comprising wind monitoring, wind mapping and complex terrain projects. This program covers 800 stations in 24

states with 193 wind monitoring stations in operation at present. IREDA-sponsored wind power development program provides financial assistance for the project and extends equipment financing

Biomass Energy and Cogeneration:

Biomass holds considerable promise as an eco-friendly source for generation of power for decentralized applications. More than 540 million tons of crop and plantation residues are produced every year in India and a large portion is either wasted, or used inefficiently. Conservative estimates indicate that over 17,000 MW of distributed power could be generated through Biomass.

Hydro Projects:

With numerous rivers and their tributaries in India, small hydro RE presents an excellent opportunity with an estimated potential of 15,000 MW with only 10 percent of this sector exploited so far. The GOI is encouraging the development of small hydro projects and the GOI is providing concessions for existing hydro projects including financial support for renovation, modernization and capacity upgrading of aging small hydro power stations.

Energy from Wastes:

The rising piles of garbage in urban areas caused by rapid urbanization and industrialization throughout India represent another source of non-conventional energy. An estimated 40 million tons of solid waste and approximately 5,000 million cubic meters of liquid waste are generated annually in the urban areas of India. Good

potential exists for generating approximately 15,000 MW of power from urban and municipal wastes and approximately 100 MW from industrial wastes in India.


The GOI recently mandated the blending of 10 percent fuel ethanol in 90 percent gasoline. This mandate has created an approximately 3.6 billion-liter demand for fuel ethanol in blend mandate to the entire country. This significant demand growth creates a  tremendous manufacturing opportunity for the U.S. fuel ethanol industry seeking to expand its investments internationally.

Market Entry

Recognizing the enormous potential of RE technologies, the GOI has issued guidelines to all state governments in India articulating the policies that states should follow to attract private sector investment and promote commercial projects in the renewable energy sector. States, such as Gujarat, Kerala, Madhya Pradesh, Maharashtra and Tamil Nadu, have provided sales tax exemptions/deferment policies for investment in wind power projects. The states also have created additional major policy initiatives to encourage private/foreign direct investment to tap energy from renewable sources of energy, including provisions of fiscal and financial incentives (e.g., 100 percent depreciation), simplification of procedures for private investment including single-window permit procurement, reduced number of required governmental authorizations and unrestricted levels of foreign direct investment in the ownership of renewable energy projects. The GOI is encouraging foreign investors to establish renewable energy based, power generation projects on the BOO, i.e., build-own-operate, model.

The GOI also provides exemptions/reductions in the excise tax duty on the manufacture of most renewable energy systems and devices such as flat plate solar collectors, solar water heaters and systems, Solar PV cells, windmill systems, and any specially-designed devices which operate those systems (e.g., including electric generators and pumps running on wind energy, bio gas plants and bio gas engines, etc.); The GOI provides "soft" loans on favorable terms to manufacturers and users for commercial and near commercial technologies through (i) the Indian Renewable Energy Development Agency ("IREDA"), (i.e., a public sector, GOI-owned, company of the MNES) and (ii) some of the Indian nationalized banks and other financial institutions for identified technologies /systems. The renewable energy industry is identified as a ‘priority sector’ by the Reserve Bank of India ("RBI") to obtain loans from banks; and The GOI provides a facility for third party sales of renewable energy power.

Market Issues & Obstacles

The main bottlenecks for large-scale development of RE includes the following: risks involved in technology adoption; distortions in energy market and easy availability of conventional energy with established networking arrangements; stiff competition from subsidized conventional energy and its universal applicability; lack of large scale production facilities; high capital investment and marginal commercial viability; lack of marketing mechanisms; lack of trained manpower.

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