Developing countries as well as international development assistance have for a long time aspired to combat energypoverty in rural areas of developing countries. However, until now a major part of national and international publicand private attempts to provide affordable and stable energy supply have failed due to various economic, political,social and institutional obstacles. This situation is reflected in case of India where in comparison with other South Asianstates the status of rural electrification and of energy supply are in a dismal state despite the promotion of renewableenergy and rural electrification as early as from the 1960s. Embedded in the global context of the international climatechange regime, the Clean Development Mechanism (CDM) of the Kyoto Protocol has now emerged as a new option tofacilitate investment in climate change mitigating projects. In this respect, promoting the deployment of renewableenergy through this project-based mechanism opens new avenues for rural electrification.The main objective of this paper is, hence, to examine the context conditions and factors determining the effectiveapplication of renewable energy options for rural electrification in a developing country context, namely India.Understanding contextual requirements for renewable energy investment has proved imminently important in order toappreciate the potentials provided by new market-based mechanisms such as the CDM for rural poverty alleviation.Comparative political science case study research methods are applied to the analysis of CDM biomass projects in thecontext of the four Indian states of Tamil Nadu, Maharashtra, Punjab and Andhra Pradesh. This allows for theconclusion that socio-political and historic framework conditions matter for the implementation of new renewableenergy options.