Lucrative Renewable Energy Investment Options: An Analysis of Financing Options

The investment in the renewable energy sector has tremendously increased across the globe in the last decade. The rise in solar and wind energy build-up assets since 2012 has brought in light the potential of India to attract investment in the clean energy technologies. The increasing figures of cash flow may not simply imply that the growth trajectory shall not be interrupted. Since the clean energy technologies involves commensuration of risk and funds at right stage of the project, the flow of funds at correct time and in appropriate mode is a significant decision. As the trends indicate, private investors are hesitant of investing in the early stage of the project. While the project becomes operational the uncertain nature of investment modes results in reduced return on investment and thereby discouraging a continuous investment renewal in the sector. This resistance comes ahead of regulatory and financial constraints. This research work aims to study the viability of the Alternate Investment Fund (AIF) options for private investors in the clean energy technology and infrastructure. The work also proposes to highlight the policy concerns in the capital and securities market for specifically upcoming investors in the energy sector. To channelize the multilateral power trading network as a solution to high figures of losses in Generation and transmission sector, we need to engage in a multi-pronged discussion on the modes of investment. Investment decision thus involves consideration of risks associated and the policies governing these modes. Both foreign and domestic venture capital funds have been on rise post 2005 and thereby, SEBI has brought forward regulations to incentivize the private sector investors. This research work tries to carve out the role of SEBI to foster long term efficient investment goals in this area. The scope of this work is limited to the private equity prospects in the renewable energy infrastructural development.