Institutions and credibility of governance structures

This thesis analyses the cases of highly diverging state level solar policy outcomes in India and seek to explain the institutional dynamics affecting the credibility of governance structures for public promotion of renewable energy. By adopting a New Institutional Economic perspective, the study develops a theoretical framework combining Transaction Cost Economics and Positive Political Theory to evaluate the role of intuitions in restraining actors’ opportunistic behaviour and examining their implications on the credibility of governance structures. Case study of two Indian states has been evaluated through a comparative institutional analysis employing qualitative empirical enquiry of the microanalysis of actor interaction. By evaluating the nature of transactions, the associated transaction risks and roles of institutions in restraining actors’ opportunistic behaviour, the study highlights that credible governance structures can exist so as long as policy and operational risks are restrained. It establishes that institutions can constrain such risks and affect the credibility of governance structures through their impacts on the design of incentive structures and governance mechanisms. By identifying empirically substantiated elements of the institutional factors affecting governance mechanisms and incentive structures, this study provides an analytical framework for evaluating the credibility of governance structures in public promotion of renewable energy. It also underlines the relevance of contractual arrangements based on a fixed feed-in tariff as opposed to reverse bidding processes and the commitment of state agencies in policy implementation as key driving forces for attracting private investment in the solar energy sector.