Financial analyses, which consider financial costs and income, have typically informed energy-related decision-making and investment planning. Economic analyses, however, take societal impacts as a whole, and include social, economic and environmental costs and benefits, which are especially critical in energy policymaking and planning.

To support systematic consideration of such societal impacts in decision-making, this working paper proposes a framework to identify and assess the relevant socioeconomic and environmental impacts of renewable power technologies in India and to estimate their economic rate of return (ERR). The paper proposes ERR as an indicator that could be utilized to summarize the sustainable development impacts of RE in an understandable and comparable metric to guide decision-making. The working paper also demonstrates the application of the framework by estimating the ERR for Ground Mounted and Rooftop Solar, Wind, Biomass and Small Hydro power generation in India. These estimates highlight the drivers of costs and benefits for RE technologies in India.

Key Findings

  • When used in the decision-making process, sustainable development (SD) impact assessments and Economic Rate of Return (ERR) estimates can better inform policy choices and help improve implementation of renewable energy (RE) technologies by minimizing associated societal costs and optimizing potential benefits.
  • A better understanding of SD impacts of RE deployment can also help better align RE targets and policies with sustainable development goals.
  • Applying the framework to estimate the ERR for RE technologies in India demonstrates that the economic returns of RE deployment depend on the prevailing technology specifications, local context, scale of the deployment, economic value assigned to the impacts, and the availability of reliable data.
  • Applying this framework in regional contexts can provide a nuanced understanding of the relative returns of RE technologies and thus support improved RE planning and deployment based on local priorities, technology availability and costs, and the local socioeconomic and environmental circumstances.

Executive Summary

Full executive summary available in the paper.