In India, there is a huge gap between the power supply and demand, demonstrated by the peak shortage of 12.1% and energy shortage of 10.6% for the fiscal year 2010/11. Renewable energy projects, with the exception of small hydro, have short gestation periods and can be implemented quickly to meet immediate shortages across the country, whereas, fossil fuel plants require 3-5 years before they can generate power and are environmentally unfriendly. Another important advantage of renewable energy over conventional power generation sources is that renewable energy projects can be easily deployed using locally available resources close to the load centers and even in areas which do not have access to electrical network. Thus, renewable energy contributes to energy security for the country while delivering power to the less privileged.
The Government of India has also announced favorable regulatory policies including the RPO (Renewable Purchase Obligation) policy which requires states to purchase target amounts of renewable energy per annum. In addition, to encourage green power generation,state regulators offer attractive tariffs for renewable energy over energy from non-renewable sources.