India’s renewable energy sector faces financing challenges that could undermine its 2030 targets, prompting this review of cost of capital dynamics across utility-scale solar and wind projects to address gaps in understanding how financing costs evolve with market maturation and policy intervention. We synthesize evidence from six estimation methodologies, analyse risk drivers through four comprehensive studies, and trace policy evolution across fifteen years, revealing a fundamental tension in cost of capital research where approaches requiring actual project finance data provide high precision, but limited scalability compared to survey methods and financial market proxies that sacrifice accuracy for broader coverage. Historical trends document a complete financing cycle rather than steady improvement, with multiple estimation methods showing WACC compression of 300-400 basis points from 2012-2020 driven by market maturation, followed by 320 basis points expansion through 2024 as global monetary conditions tightened, while wind’s historical financing premium over solar has disappeared entirely as both technologies now access identical debt pricing ranges of 8.59.75%. Risk analysis across multiple studies consistently points to power purchase agreement counterparty concerns as the most significant financing barrier, reflecting deeper structural problems within India’s electricity distribution system where companies face persistent financial distress, accumulating debt of ₹6.84 trillion despite repeated policy interventions, though currency risk has become less material as domestic financial institutions developed greater comfort with renewable energy financing. Policy evolution through four distinct phases successfully tackled many project-level risks, introducing competitive auctions that drove tariff
reductions exceeding 80%, yet these technical achievements have been undermined by persistent systemic challenges, with over 50 GW of successfully auctioned capacity now stalled as distribution companies delay signing power purchase agreements, revealing that while India has solved many financing and technical barriers, fundamental distribution sector problems continue to constrain growth, leading us to identify four research priorities: quantifying grid integration financial implications, developing bankability frameworks for storage technologies, evaluating risk mitigation effectiveness, and creating energy policy uncertainty indices.