This thesis analyzes the divergent state-level solar policy outcomes in India, focusing on the institutional dynamics that influence the credibility of governance structures for promoting renewable energy. Utilizing a New Institutional Economic perspective, it develops a theoretical framework that integrates Transaction Cost Economics and Positive Political Theory to assess how institutions can mitigate opportunistic behavior among actors and their implications for governance credibility. The study conducts a comparative institutional analysis of two Indian states through qualitative empirical inquiry into actor interactions. It evaluates transaction nature, associated risks, and the role of institutions in curbing opportunistic behavior, revealing that credible governance structures can thrive when policy and operational risks are managed. The research establishes that institutions can influence governance credibility by shaping incentive structures and mechanisms. By identifying key institutional factors affecting governance and incentives, the study offers an analytical framework for assessing governance credibility in renewable energy promotion. It emphasizes the importance of fixed feed-in tariff contracts over reverse bidding processes and highlights the commitment of state agencies in policy implementation as crucial for attracting private investment in the solar sector.
