Access to reliable, affordable electricity can improve indoor air quality, health, and education outcomes as well as support poverty alleviation, irrespective of the power generation technology used. However, power generation itself, using fossil fuel or renewable energy technologies, may entail socioeconomic and environmental externalities that are often not considered in decision-making. Renewable energy-based power generation has the potential to alleviate some of these social and environmental challenges and create new jobs.
India aims to install 175 gigawatts of renewable energy by 2022. As India implements ambitious renewable energy targets with almost 20 percent average annual growth in installed capacity over the past five years, some renewable energy projects have been commissioned at prices competitive with those for cheap fossil fuels. As renewable energy is poised to significantly contribute to the energy mix in India, it has the potential to deliver a range of sustainable development benefits related to health, water, employment, and greenhouse gas (GHG) mitigation.
This paper proposes a framework to identify and assess the relevant socio-economic and environmental impacts of renewable energypower technologies in India and to estimate their economic rate of return (ERR). The paper proposes ERR as an indicator due to its ability to summarise sustainable development impacts of renewable energy in an understandable and comparable metric to guide decision-making. It draws on the Initiative for Climate Action Transparency (ICAT) Sustainable Development Guidance Methodology to develop a methodological framework for an ex-ante assessment of socioeconomic and environmental impacts of renewable energy technologies in India. The framework provides a stepwise approach to assess these impacts in economic terms and to arrive at the ERR for renewable energy technologies.