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Renewable Energy Vision
Expert analysis on the most pressing issues facing the renewable energy sector in the U.S and abroad from ACORE staff, members and supporters.

International Update: Where to Next for Renewable Energy Investment?

Published on 25 Jul 2016  |   Written by    |  

While China has been grabbing the attention of the Asia-Pacific market and Mexico and Peru have been making headlines in Latin America with record low auction prices, developers looking to further expand in those markets should look to two countries: India and Argentina. The Indian government released big news for renewable energy developers in July as the Ministry of New and Renewable Energy (MNRE) announced its plan to double the large-scale solar target from 20 to 40 GW by 2020. Argentina is also prepared for increased growth in renewable energy capacity as the country plans its first renewable energy auction under President Mauricio Macri’s "RenovAR" program in mid-August. Savvy project developers and investors who can navigate the political landscape of these countries will find new and unprecedented opportunities for growth and return on investment.


With a population of over 1.2 billion and several of the most polluted cities in the world, India stands to be the focal point for reducing global carbon emissions and meeting the targets established in the Paris Agreement. In terms of air pollution, India has two of the top 5 and four of the top 10 most polluted cities in the world for PM2.5 particle pollution.[1] These statistics come from a country that produces nearly 70% of its electricity from coal, oil, and natural gas and which is expected to substantially increase its energy demand over the next 25 years, accounting for a quarter of global energy demand by 2040.[2] In order to meet the growing demand, Prime Minister Narendra Modi has called for a massive boost in renewable energy capacity to 40% of the country’s energy mix by 2030.[3] To achieve this goal, India will add 175 gigawatts (GW) of renewable energy capacity by 2022, including 100 GW of solar and 60 GW of wind. The country will also require an astounding $1 trillion of new investment.

Prime Minister Modi’s ambitious renewable energy goals, the increasing power demand, and the growing opportunities for off-grid and micro-grid solutions in rural areas means that investors should be bullish about the Indian renewables market. There’s still uncertainty about the national grid and Indian discoms’ (distribution companies) ability to safely and effectively distribute clean energy to a country that has largely received free electricity for years. But the current government’s commitment to transmission lines, rural electrification, and other energy infrastructure improvements presents a tremendous upside for investment. In addition to the tax holiday and accelerated depreciation benefits available to infrastructure projects, the Indian government has also set up a dollar bidding process, pricing all power purchase agreements (PPA’s) in U.S. dollars to protect offshore project developers from local currency risk. Not only has the government instituted this currency hedge, but almost all states have also implemented a solar net metering policy, spurring growth in the rooftop solar sector.[4] Given the massive number of rural and off-grid communities, India has also become a leading market for micro-grid electrification powered by local renewable energy sources.[5]

For investors seeking to expand their portfolios in the Indian renewables market, a number of banks–including Axis Bank Ltd. and Yes Bank Ltd.–are poised to issue a host of new green bonds on the heels of the government’s drive to install renewable energy capacity.[6] Indian developers are also eager to list project assets in infrastructure investment trusts (InvIT) under a new law that exempts dividends earned on these investments from taxes. InvIT’s provide early-stage project developers an alternate exit medium and provide institutional investors an opportunity to access a steady stream of tax-free dividend income.

Due to the environmental and political threats that climate change and air pollution pose, we can expect for the Prime Minister to follow through on his commitment to a low carbon future. This will create attractive investment opportunities in the massive and growing Indian renewables market as the country builds out capacity for a population in dire need of low-carbon emitting sources of energy.


With its windswept Patagonian highlands to the south and unrelenting horizontal irradiation to the sunny northwest, Argentina likely has the greatest renewable energy potential in the world.  Yet Argentina has been unable to meet peak energy demand, resulting in blackouts across the nation. In a country historically reliant on natural gas for the bulk of its electricity generation, solar only accounts for 0.1% of generation.[7] However, these figures are about to change as renewables are set to take center stage under Argentina’s new leadership. President Mauricio Macri is preparing to capitalize on his country’s vast wind and solar resources through his “RenovAR” program, aimed at increasing renewable energy deployment to 20% by 2025. For developers looking to enter the Latin American renewables market, Argentina provides unmatched opportunities and the political backing of a leader determined to bolster the country’s efforts in the fight against climate change.

To achieve the renewable energy targets of the RenovAR program, the Argentine government has revamped its auction process for new renewable energy generation. The first auction, scheduled to open on August 22, is set to install 1 GW of renewable energy capacity and spur $2 billion of investment in the sector.[8] Of this 1 GW, the government is seeking 600 MW of wind, 300 MW of solar, 65 MW from biomass, 20 MW from small hydro, and 15MW from biogas.[9] The results of the upcoming auction will be crucial in determining the industry’s future as recent auctions in Mexico and Peru drew record low bids. To establish the Argentine renewable energy market and encourage investors and project developers seeking to enter the market, the RenovAR program created a "trust fund for renewable energy", or "FODER". This fund will provide $850 million in financial guarantees for renewable energy projects. Through the RenovAR program, President Macri promises to usher in a new age where blackouts no longer occur and solar accounts for more than just 0.1% of the nation’s energy mix.

With the impending boom of Argentina’s renewable energy industry on the horizon, developers should pay attention to the auction results in August. With the support of a government seeking to grow the renewables market and some of the best renewable resources in the world, Argentina could provide an unparalleled opportunity for smart developers.

Patrick Eble

Patrick Eble is an intern at the American Council on Renewable Energy (ACORE). He is interested in renewable energy finance and has conducted research on new financial instruments in the renewable energy space and international investment in emerging renewable energy markets. He has also analyzed trends in the U.S. solar industry, creating a financial model to understand state-specific risks and opportunities. He is a graduate of Princeton University and will be attending the University of Cambridge, Cambridge, U.K., in the fall to pursue a Master's in Environmental Policy.

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