Join Gireesh Shrimali, Faculty Fellow at the Steyer-Taylor Center, for a BBL at the GSB. Gireesh will talk about his work in assessing the effectiveness of various financial policies employed by the government to encourage the growth of renewable energy in India.
More detail on Gireesh's work:
The Government of India has set ambitious targets for the growth of renewable energy in the country: it aims to double the existing renewable energy capacity to 55,000 MW by 2017. However, renewable energy is still 52-129% more expensive than conventional power and requires policy support, provided by the state governments – in form of feed-in tariffs – as well as the central government, which uses diverse mechanisms such as accelerated depreciation, generation based incentive and viability gap funding. Using project-level cash-flow models, we compare these existing federal policies with a new promising class of debt-related policies – e.g., interest subsidy, reduced-cost loan, and extended-tenor debt – along many criteria identified as important in our conversations with policymakers. We find that no single policy is superior across all parameters and that the ultimate policy decision would depend on the relative importance of these criteria; however, the following policy implications emerge. In the long-term, reduced-cost extended-tenor debt is an attractive policy, given that, compared to existing policies at corresponding cost-effectiveness potentials, it is not only 28-78% more cost-effective but also has a 49-76% higher subsidy-recovery. In the short-term, an interest subsidy is an attractive policy, given that, compared to existing policies at current support levels, it is not only 11% more cost-effective but also can support 30-83% more deployment. Finally, in the short-term, though accelerated depreciation is an attractive policy – it is 10-17% more cost-effective and can support 44-87% more deployment – its ultimate usage would depend on how well it can incentivize power production.