Sammendrag
The paper highlights the role of subsidies in the PV solar installments both from the lenders and from the receiver’s perspective, evaluating the existing financial incentives contributing to the adoption of PV solar technology. It evaluates the costs and benefits accumulated by the installation of grid-connected PV solar panel of size 2.5 and 10 kW using the method of cost–benefit analysis and net present value. The paper observes a significant role of subsidies in realizing the benefits in case of PV solar installations. The results of cost–benefit analysis reveal that the internal rate of return is greater in case of subsidy than without subsidy indicating the role of subsidies in incentivizing the investment in PV solar systems. An internal rate of return is 13% for smaller plant and 19.94% for larger plant with subsidy. However, the slow growth in investment observed in past years reflects the vulnerability of the PV solar system on the financial structure. The PV solar costs that are highly vulnerable to technological innovations, and the subsidies in such cases are bound to accumulate financial liabilities for government in terms of opportunity cost foregone by not investing in new technology. Moreover, the reduction in the costs of PV solar technology is contributing in shorten the gestation period and achieving break even hinders investors in making investment decisions. The present situation of PV solar development in India needs not only a periodic assessment process to tackle the issue of rapid innovation in technology but also relevant policies and procedures promoting buyback options to integrate upgradation of technology.
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