India’s energy requirements by 2017 are projected to be 1,392 billion units of electricity. Power generation will need to grow at the compound annual growth rate (CAGR) of nine percent to meet this requirement. A CAGR of 5.17 percent was achieved between 2001 and 2010. In order to double this growth rate, India will depend not only on traditional energy resources (coal and water), but also on nuclear and renewable resources (solar and wind power).

The installed capacity in India’s renewable energy sector has grown from three to nearly 12 percent, in the last decade. The production capacity saw a CAGR of 18 percent in the last five years. In the next decade, the installed capacity is expected to reach 70 GW, from the present 22 GW, and the production capacity is expected to see a growth of over 20 percent.

Growth in the last few years has been largely possible due to strong and sustainable government policies, stable regulatory framework, capital subsidies, feed-in-tariffs, government incentives such as accelerated depreciation offered on projects and those based on power generation.

India has supported growth of both off-grid and on-grid installations. The renewable energy purchase scheme (which makes it mandatory for Indian states to meet a certain percentage of their power requirement through electricity generated from renewable resources), renewable energy certificates (which can be traded to meet these mandatory targets), and open access to electricity, have created confidence among domestic and international investors and increased private sector participation. Investment in India’s renewable energy sector in the first three quarters of 2011 stood at more than $7 billion; about 26 percent higher than the total investments in 2010.