Financial Performance of Renewable and Fossil Power Sources in India

Round 1

Reviewer 1 Report

• Brief summary

Considering the case of India, the manuscript compares the financial performance of the renewable energy power sector with that of the fossil fuel energy power sector. Using portfolio analysis, it is concluded that the renewable energy sector performed better, from the point of view of return and risk, than the fossil-based energy sector.

• Broad comments

• areas of strength

Quite frankly, in my opinion, the greatest strength of the manuscript is its results. Since they are in favor of the renewable energy power sector, they constitute yet another argument – in this case, from a financial point of view – to invest even more in this energy source, which is increasingly pressing to ensure the sustainability of the energy sector in particular, and of the entire planet in general.

• areas of weakness

I am of the opinion that manuscript has three weaknesses, one minor, one medium and one major, which are described (respectively) below.

• Specific comments

• • The manuscript is somehow technical, but one can acknowledge the effort made by the authors in an attempt to clarify it, making its understanding as easy as possible. In particular, it is important to emphasize the care with the supply, whenever possible, of the structure, and corresponding content, of the manuscript. On the other hand, there was little effort with regard to the graphic aspect, namely in the figures that appear in the main body of the manuscript.

To clarify, let us consider two figures, purposely of a different character. Figure 1 (page 6), produced by the authors, is difficult to read because the x-axis presents, as far as I can tell, the dates reversed in time. Is there any good reason for this?

As for Figure 2 (page 7), it was transferred from a website. From the outset, as the authors know, this practice should be avoided as much as possible, not least because it may be necessary to obtain authorization from the original authors to reproduce them. In this case, there is an even better reason for the authors to produce (themselves) the figure, as it is not difficult to do so and, in addition, it may be a better figure than the one on that website. I clarify this last aspect, presenting the figure that I myself produced (in less than 15 minutes, using a simple spreadsheet) – I am aware that it will not be visible online, but it will appear in the pdf version of this report that I will submit – immediately below.

As this figure shows – and, indeed, Figure 2 (in the manuscript) does not show – it is possible, in certain circumstances, to obtain a risk-free portfolio. Note that in Figure 2 (in the manuscript) this result is mentioned, but, in fact, the efficiency frontier (of the portfolio) does not contain it. But, more importantly, when viewing Figure 2 (in the manuscript), one gets the idea that obtaining higher (expected) returns is always done at the expense of an increase in risk. In fact, this happens in the efficient part of the frontier, but there is usually also a part of the frontier where, in fact, (expected) return can be increased at the same time that risk is reduced. This fact is visible in the figure shown above (but, again, not in Figure 2 of the manuscript).

That said, I suggest that Figure 2 be produced by the authors themselves.

• • I am of the opinion that the concluding section should contain, not only a summary of the answers obtained to the key questions, but also the limitations of the study, which could give rise to future analyses. I recommend that the authors adopt this good practice, from a scientific point of view.

• Finally, I have a (major type) recommendation, which is related to the influence that the perceptions, on a certain fact, have on the accomplishment of that same fact. The authors themselves recognize that perceptions/beliefs can be irrational or rational (page 11: 356). Because it seems to me that in these matters the so-called self-fulfilled prophecies can play a relevant role, I am of the opinion that the manuscript would gain robustness if the authors elaborated a little on this aspect, with regard to the results of their analysis. Does a belief in a low (resp. high) risk contribute, or even give rise, to a low (resp. high) risk, in fact? If this is true, is the lower risk associated with the assets of the renewable energy power sector a fact or (just) an artifact?

Comments for author File: Comments.pdf

Author Response

Please see the attachment.

 

Author Response File: Author Response.pdf

Reviewer 2 Report

The paper examines the financial performance and risk profile of the renewable energy and fossil fuel power sectors in India with the use of both historical and primary data collected by field research. Its novelty does not rely on methodology, as standardised methodologies are employed to answer all research questions, but on the geographical focus (India) and data used. The results will be interested for policy actors (private investors and state authorities) in the energy sector in India.

Specific Comments: 

1. Lines 374-392: Author(s) should present information about the population of the selected sample and explain why the latter is unbiased. Further, to what extend the 16 responders are representative sample to the population?
2. Add 'source' after all Figures and Tables, even if it is “Authors' own calculations”
3. Lines 396-399: Price of energy produced by fossil fuel depends heavily on CO2 emissions cost at international market. Since coal produces considerably more CO2 emissions in the electricity production than natural gas, a comment should be made about this investors' perception, as it is unexpected.
4. In the Appendix, Figure 18 is out of the numbering sequence; the same applied for Box 2 and Figure 21. The impression is, for these figures, that are taken from another source. Author(s) should ensure that there is no copyright infringement and provide appropriate reference.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Bearing in mind that the authors revised the manuscript according to my previous recommendations, even if at a minimum level, -- in such a way that my review report seems to be more extensive than the revisions incorporated in the manuscript -- it is my opinion that the manuscript can be published.

Comments for author File: Comments.pdf