Sustainable Development With Renewable Energy in India and Pakistan

Abstract

The development and massive use of renewable energy depends on two main factothe use of Reuse rs: progress of related technologies and dedicated incentive policies. Improvement of technology is highly dependent on the amount of founds dedicated to the related R&D. Long-term incentive policies that address favoring investment are also essential to achieve general progress and a widespread use of clean energies. However, the latter scenario is not always available and in some countries, and confusion emerges as stable incentive policies are lacking.  In this paper we show a capital budgeting analysis of standard investments in renewable energy photovoltaic systems in two developing countries such as India and Pakistan. Standard profitability indicators, such as net present value, payback and internal rate of return, are applied to such investments. The production of electricity through solar energy is sustainable from both economical and ecological point of views. This can be an additional advantage for developing countries like India and Pakistan, as they have much of their electric network still under construction. Despite the lack of incentive policies, we show how the technology and the markets are nowadays enough mature to consider photovoltaic systems for electric energy production a profitable investment from an economic viewpoint.

Keywords

• Capital budgeting; Solar energy investments; Cash Flow Diagram; Net Present Value; Internal Rate of Return

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