Private Equity investment in cleantech reduces sharply

According to The Business Standard, private equity (PE) investments in clean technology projects have almost halved this year. This year the RE sector had 12 PE investments worth around $396 million whereas last year there were 36 PE deals worth $793 million. After removal of Accelerated depreciation the investment in wind sector has gone down. Investment has also been low in Solar, Biomass and Hydel energy as there is not a clear vision on its future power prices.The regulations and policies of different states is not very attractive enough to pull investors into their state.
With other benefits also being withdrawn, REC mechanism is only there to pull investors into RE sector. But REC market is also not in a good condition now because the enforcement of RPO is very weak and there is an oversupply of RECs in the market with very few buyers.
Abhay Anand, business director (infrastructure, energy) of Cipher Capital Advisors said,” More than the uncertainty over the Kyoto Protocol, it is the uncertainty over the renewal energy certificate (REC) programme that is denting the sentiments. The government had started the REC regime under which power distribution companies were mandated to buy the certificates. But there are no buyers for REC now. Lack of strict imposition of the regime is another reason for the lack of interest.”
The regulatory and policy makers have to come up with strong and attractive schemes to pull the PE investors in RE sector else they will slowly move out of the country.