Impact of Government Policies on Green Finance Flow to Private Renewable Energy Companies in India

Abstract

The shift to renewable energy in India needs significant amounts of finance, especially for private renewable energy firms that contribute largely towards increasing the capacities of solar, wind, hydro and other forms of renewable energy sources. These policies have the ability to impact the flow of finances by making investments less risky, more viable and encouraging the creation of institutional financing mechanisms, among others. This paper analyses the effects of policies on the flow of green finances to private renewable energy firms in India. The policies being analysed include Jawaharlal Nehru National Solar Mission, viability gap funding, institutional finance through renewable-energy financing organizations, renewable purchase obligations, green bond issuance, blended finance and climate finance instruments, among others. Some of the challenges facing the flow of green finances to renewable energy firms include high capital cost, minimal involvement of financial institutions, non-compliance with renewable purchase obligations, underdeveloped debt markets and relatively low foreign investment. This paper uses a qualitative approach to analyze the connection between policies and flow of finances to renewable energy firms based on secondary data from government policies, institutional reports and other related studies.