As India prepares to meet its increasing energy demands, which will likely double by 2030, the government has set a path towards ambitious renewable energy targets of 175GW by 2022. Raising enough finance will be central to achieving these targets. The Indian government has stated that a significant portion of finance for these targets will need to come from foreign investors. However, foreign investors face a significant barrier to investing in renewable energy in India: off-taker risk. An off-take agreement is a power purchase agreement between a producer and buyer (or off-taker) of power, typically negotiated prior to construction of a project, that guarantees that the buyer will purchase a certain amount of electricity. This makes it easier for the producer to secure financing. Off-taker risk is the risk that the buyer/off-taker will not fulfill its contractual obligations. Off-taker risk is a key contributor to the overall credit risk of a power project.
Links:
[1] http://admin.indiaenvironmentportal.org.in/reports-documents/driving-foreign-investment-renewable-energy-india-payment-security-mechanism
[2] http://admin.indiaenvironmentportal.org.in/category/author/arsalan-farooquee
[3] http://admin.indiaenvironmentportal.org.in/category/author/gireesh-shrimali
[4] http://admin.indiaenvironmentportal.org.in/category/publisher/climate-policy-initiative
[5] http://admin.indiaenvironmentportal.org.in/category/thesaurus/renewable-energy
[6] http://admin.indiaenvironmentportal.org.in/category/thesaurus/india
[7] http://admin.indiaenvironmentportal.org.in/category/thesaurus/foreign-direct-investment-fdi
[8] http://admin.indiaenvironmentportal.org.in/category/thesaurus/finance
[9] http://admin.indiaenvironmentportal.org.in/thesaurus/jawaharlal-nehru-national-solar-mission-jnnsm
[10] http://admin.indiaenvironmentportal.org.in/category/thesaurus/industry
[11] http://admin.indiaenvironmentportal.org.in/category/thesaurus/electricity