In efforts to bring down the cost of renewable energy, government will provide low cost funding for clean energy projects.

Announcing the Union Budget for 2013-14, Finance Minister P Chidambaram said that power generation-based incentives for renewable projects would be restored.

"... Despite cost advantages in labour, land and construction, the consumer pays a high price for renewable energy. One of the reasons is high cost of finance," Chidambaram said.

To provide low cost finance, government would offer low interest bearing funds from the National Clean Energy Fund (NCEF). These funds would be given to Indian Renewable Energy Development Agency (IREDA) to on-lend to viable renewable energy projects.

"The scheme will have a life span of five years," the Minister said.

Moreover, the government plans to encourage schemes to convert waste into energy.

"We will evolve a scheme to encourage cities and municipalities to take up waste-to-energy projects in Public Private Partnership (PPP) mode which would be neutral to different technologies.

"I propose to support municipalities that will implement waste-to-energy projects through different instruments such as viability gap funding, repayable grant and low cost capital," the Minister said.

Besides, the government has decided to provide incentives for wind energy sector.

"I propose to reintroduce 'generation-based incentive' for wind energy projects and provide Rs 800 crore to the Ministry of Non Renewable Energy for the purpose," Chidambaram said.