Renewable energy projects costlier in India than in US or Europe: Report

High financing costs in India.

This is the reason why developing renewable energy projects are higher than in the US or Europe despite India's low labor and construction costs.

According to a report by the Climate Policy Initiative and the Indian School of Business entitled ‘Meeting India’s Renewable Energy Targets: The Financing Challenge’, the high interest rates and low availability of debt may add 24-32 per cent to the cost of renewable energy projects which may make it difficult it difficult for the country to meet its renewable energy targets.

In comparison to conventional power generation sources such as coal or gas, renewable energy is characterized by a relatively high initial investment, followed by low variable costs. Since a much greater share of the cost of energy is determined by the initial investment, higher financing costs have a disproportionate impact on renewable energy. This puts renewable energy at a relative disadvantage in India, according to the report.