Wind and solar power deployment in India: Economic aspects and policy implications

Abstract

Economic assets play a key role in the growth of renewable power projects and depend on financial scenarios and policy structures offered by government policies. The focus of the study is to assess the impact of the existing economic scenarios and related government policies on wind and solar power deployment in India. The financial analysis of wind and solar power projects, along with parametric and sensitivity analysis, were performed based on the techno-economic parameters of recent wind and solar energy projects. Factors incorporated into the study are capital cost, annual cash flow, project terminal cost, discount rate, cost of capital, tax rate, capacity factor and technological degradation factor. The results show that the values of levelized cost of electricity (LCOE) calculated for recent wind and solar projects are ₹4.89/kWh ($0.0698/kWh) and ₹4.05/kWh ($0.0578/kWh), respectively, which can be reduced to ₹2.36/kWh ($0.0337/kWh) and ₹2.12/kWh ($0.0303/kWh) through proper amendments to the existing policy, an improved financial framework and technological enhancements. The study will be beneficial to policymakers and project developers, helping to boost the future deployment of wind and solar power projects. (Note: USD ($) was converted to Indian rupee (₹) at an exchange rate of 1$ = 70₹ throughout the paper.)