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Over the years, Governments of South Asia have faced the challenge of achieving the goal of sustainable development. On the one hand, they must satisfy the ever-growing demand for energy and, on the other hand, the interminable deterioration of the environment is causing great concern among political economists. The widening gap between the demand and supply of energy, over-reliance on the use of fossil fuels, and increasing import bills due to rising global prices are the challenges that South Asia is facing. These can be overcome by using its great potential in renewables. This paper uses SWOT methodology to identify that the poor financial situation of the distribution companies, due to power losses and non-cost-reflective tariffs, and the lack of credit opportunities, due to high interest rates and inaccessibility of loans for the long-term, are the major impediments to the growth of the renewable energy sector of the region. Moreover, there is a conflict of interest between the manufacturers of renewable energy equipment and the developers of renewable energy projects in terms of Government policy concerning the imposition of import duties. India is moving towards protection of the former, while the latter see opportunities in the renewable energy sector of Pakistan. [ABSTRACT FROM AUTHOR]