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incentives like accelerated depreciation while others are public finance-
based incentives like generation-based incentives. It should be noted
that the financial and business models are dependent primarily on
granular details, very specific to the project sites, the state (or province),
and the kind of RE in question like wind, solar or any other type. There
can also be independent power purchase agreements (PPAs) which
can be beneficial to both RE developers and obligated buyers. A list
of policies and regulations concerning renewable energy is given in
Table 2.14.
Table 2.14: Policy instruments for renewable energy in India
Capital To popularize the use of solar water heating and solar lighting equipment in homes,
subsidies MNRE offers suitable incentives in form of capital subsidies for purchase and
installation of solar equipment which results in their reduced cost. MNRE has previously
been running similar capital subsidy schemes to promote small capacity SPV systems
under JNNSM.
Low interest Lending at concessional rates is beneficial to bring down the cost of funds for RE
loans projects, One such instrument is being provided under IREDA NCEF Refinance Scheme
in which scheduled commercial banks and FIs are eligible for refinance from IREDA with
funds sourced from NCEF. With several organizations showing willingness to raise low-
cost and long term funds by selling tax-free bonds, the lending to RE developers should
come at lower interest rates.
Taxes and To accelerate generation of RE, Government of India has either exempted or reduced 3.2
duties various duties on the machinery, equipment and other associated components involved
exemption in renewable energy generation. Undertakings engaged in generation/ distribution of RE
have been offered a 10-year holiday as well.
Renewable RPOs (Renewable Purchase Obligations) are part of the government’s policy initiatives
Purchase wherein the government is making it mandatory for power consumers to buy a certain
Obligations percentage of its required power consumption from power produced using renewable
energy sources. These obligations are for utilities (also known as DISCOMs—
Distribution Companies) and consumers who use captive power or who buy power from
generators directly and not through utilities. The RPOs are part of the Electricity Act
2003 (EA 2003) which is the basis for the development of the regulatory framework in
the power sector in India.
Preferential Under the preferential tariff scheme (also known as Feed-in-Tariff), the utilities or central
tariff agency appointed by the government buys renewable electricity at a preferential tariff
scheme/ decided by the regulatory commission. This tariff is designed to give the required
Feed in return on investment for RE generators without putting a strain on the government
Tariff or consumers.
Net Net metering allows a solar PV user to sell surplus solar energy generated to the utility
metering and get compensated for that or buyback the deficit energy from the utility. The net
import of electricity will be chargeable to the consumer. Net metering can increase
the energy in the grid and make-up for the peak hour demand helping states facing
power shortages.
Chapter 2 Innovative Financing for Low Carbon Development 279
based incentives like generation-based incentives. It should be noted
that the financial and business models are dependent primarily on
granular details, very specific to the project sites, the state (or province),
and the kind of RE in question like wind, solar or any other type. There
can also be independent power purchase agreements (PPAs) which
can be beneficial to both RE developers and obligated buyers. A list
of policies and regulations concerning renewable energy is given in
Table 2.14.
Table 2.14: Policy instruments for renewable energy in India
Capital To popularize the use of solar water heating and solar lighting equipment in homes,
subsidies MNRE offers suitable incentives in form of capital subsidies for purchase and
installation of solar equipment which results in their reduced cost. MNRE has previously
been running similar capital subsidy schemes to promote small capacity SPV systems
under JNNSM.
Low interest Lending at concessional rates is beneficial to bring down the cost of funds for RE
loans projects, One such instrument is being provided under IREDA NCEF Refinance Scheme
in which scheduled commercial banks and FIs are eligible for refinance from IREDA with
funds sourced from NCEF. With several organizations showing willingness to raise low-
cost and long term funds by selling tax-free bonds, the lending to RE developers should
come at lower interest rates.
Taxes and To accelerate generation of RE, Government of India has either exempted or reduced 3.2
duties various duties on the machinery, equipment and other associated components involved
exemption in renewable energy generation. Undertakings engaged in generation/ distribution of RE
have been offered a 10-year holiday as well.
Renewable RPOs (Renewable Purchase Obligations) are part of the government’s policy initiatives
Purchase wherein the government is making it mandatory for power consumers to buy a certain
Obligations percentage of its required power consumption from power produced using renewable
energy sources. These obligations are for utilities (also known as DISCOMs—
Distribution Companies) and consumers who use captive power or who buy power from
generators directly and not through utilities. The RPOs are part of the Electricity Act
2003 (EA 2003) which is the basis for the development of the regulatory framework in
the power sector in India.
Preferential Under the preferential tariff scheme (also known as Feed-in-Tariff), the utilities or central
tariff agency appointed by the government buys renewable electricity at a preferential tariff
scheme/ decided by the regulatory commission. This tariff is designed to give the required
Feed in return on investment for RE generators without putting a strain on the government
Tariff or consumers.
Net Net metering allows a solar PV user to sell surplus solar energy generated to the utility
metering and get compensated for that or buyback the deficit energy from the utility. The net
import of electricity will be chargeable to the consumer. Net metering can increase
the energy in the grid and make-up for the peak hour demand helping states facing
power shortages.
Chapter 2 Innovative Financing for Low Carbon Development 279
