The Government of India has since continued to develop policy frameworks both at the federal and the state level to encourage the development of an energy market which is conducive to the growth of renewables. The government’s policies provide different incentives to promote renewables, including Feed-In-Tariffs, capital subsidies and tax benefits. In addition, demand side mechanisms, such as Renewable Purchase Obligations (RPOs) and Renewable Energy Certificates (RECs) as well as provisions for grid connectivity and forecasting, have been instrumental in pushing forward the renewables sector.
Currently, some of the main challenges facing the renewables sector include the uncertainty in state government policies, delays in implementation of government programs and the slowing down of the Indian economy due to the global economic downturn. However, the fundamental parameters in favour of renewables – India’s hunger for energy, the good availability of renewable resources and the falling cost of renewables – make India a very attractive market for renewable energy generation.