Money talks?: risks and responses in India’s solar sector

Total investment requirements to meet India’s 100 GW solar target, including the costs of project, metering infrastructure and gas-based back up, would range between USD 120 billion and USD 147 billion. However, the current trajectory of solar PV investment in India is significantly short of the mammoth annual investment required. The flow of finance in the Indian solar market is constrained by several risks, some specific to solar power projects (like technology risks, off-taker risk, evacuation risk), and other risks that are common across sectors in India like foreign exchange risks and regulatory risks. Additionally, some features of the Indian financial market also limit the supply of finance that is available and accessible to the solar power developers. This paper analyses the role of risks in inhibiting existing sources of finance. It asks if new efforts to find alternative sources of finance for solar power in India manage to mitigate such risks.