It was an interesting meeting that I had yesterday with a young entrepreneur (or should I ay would-be entrepreneur) who was thinking of quitting his high-paying job and getting into the alternative energy field in India. He was thinking about algae fuels, hence his visit to meet me.

I asked him how he was going about his explorations into the field of renewable energy, and he gave me two points:

1. He was trying to figure out the economies and competitiveness of each renewable energy source, and
2. He was figuring out what subsidies and incentives GoI was giving for each of these renewable energy sources.

I was not expecting the second point, but thinking back, I think it is a sound idea indeed. It is fairly well-known that world-over, subsidies are common-place to encourage investment in renewable energy because these sources are not yet competitive with fossil fuels, at least in most of the cases.

I was doing a bit of rummaging on the web today about the subsidies in India for renewable energy when I came across an interesting tidbit: (source)

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“Projects in the states in northeastern part of India and the hill states of Jammu & Kashmir, Himachal Pradesh and Uttaranchal currently receive the best support, with subsidies there 20% to 50% higher than in other states of India. Some of the highest direct subsidy rates have been announced for installation of grid-tied wind and small hydro, and off-grid solar photovoltaic (PV) projects. The present subsidy for 1 MW grid-tied wind is $625,000 and for 1 MW grid-tied small hydro it’s $375,000.”

Over half a million $ subsidy per MW for solar PV, not bad when the cost is only about $2 million or so per PV. Similar stuff for small-hydro, whose cost per MW is about $1.5 million.

And reading further from the same source, “The Ministry of New and Renewable Energy has identified renewable energy R&D as an important factor for developing this sector. R&D subsidy is 100% of a project’s cost in government R&D institutions, and 50% in the private sector. The R&D subsidy for the private sector may be enhanced for initial stages of technologies that have longer time-horizons.”

And talking of subsidies, if India were to be serious about its solar mission, the RE industry in India is gonna be rolling in subsidies. Entrepreneurs, wake up!