IEEFA – Cost of Capital for Indian Renewable Energy Projects: A Review of Methodologies, Risk Drivers, and Policy Evolution

This report reviews the cost of capital dynamics for utility-scale solar and wind renewable energy projects in India, examining methodologies, risk factors, and policy developments affecting financing costs.

It highlights trends such as the decrease and subsequent increase in WACC due to market maturation and global monetary tightening, the disappearance of the financing premium for wind over solar, and the major financing barrier posed by counterparty risk related to power purchase agreements. The report also discusses policy evolution, systemic distribution sector issues, and identifies key research priorities including grid integration financial impacts and risk mitigation evaluation.