Jubilee Post News & Views
Dr Seema Javed
India’s renewable energy sector has grown rapidly. It has reached a significant milestone in its renewable energy journey, with the country’s total renewable energy capacity crossing the 200 GW (gigawatt). This remarkable growth aligns with the country’s ambitious renewable energy target of achieving 500 GW from non-fossil sources by 2030.
The country’s renewable energy sector stands as an example of the country’s capacity to offer returns to investors. The sector attracted investments worth ₹7 trillion ($80 billion) between 2013-2014 and 2022-23, Pralhad Joshi, Union minister for new and renewable energy told the Parliament earlier this month. The country is set to revitalise its renewables sector.About a quarter of India’s clean transition needs, it far exceeds the investments attracted by any other clean sector in India.
During a discussion in the Rajya Sabha, Joshi said on Tuesday that the way forward for the renewable energy sector was to address present challenges as well as leverage opportunities for growth.
India’s Ambitions
India can and must rely on private sector investments to fund its ambitious energy transition goals, including achieving net-zero emissions by 2070, as significant investments are needed, estimated at US$160 billion annually between now and 2030.
India has set ambitious targets for its energy transition, including achieving net-zero emissions by 2070 and meeting 50% of its electricity needs from non-fossil sources by 2030The Need for
Private Investment
To achieve these goals, India requires substantial investments, estimated at US$160 billion per year on average between now and 2030. India will have to attract around $400 billion in financing to realize its 500 GW target of renewable energy by 2030. Scaling up risk friendly private equity financing is critical for India to achieve its target.
Government Initiatives:The Indian government is actively promoting renewable energy through various initiatives, including allowing 100% FDI under the automatic route for renewable energy generation and distribution projects.
Just Transition:
Ensuring a just transition, where no one is left behind during the shift to a low-carbon economy, is a key consideration.
Private Sector Involvement
India’s clean energy sector has seen a surge in FDI, with investments in renewable energy, EVs, wind energy, and battery energy storage systems (BESS). Private finance will be available for any project in India which makes financial sense, where the investor can make around 10% returns.
This is clearly evident from India’s renewable energy sector. This sector has attracted $80 billion in private investment over the past decade. This level of interest proves that clean energy can be both economically viable and scalable. But can India’s renewable energy playbook be extended to industries like green hydrogen and sustainable construction?
India’s renewable energy market has matured. India’s clean transition needs $2.5 trillion by 2030. while India does not expect large grants to fund its clean transition, it does need investments and concessional loans for its industry.
India is the world’s 3rd largest consumer of electricity and the world’s 3rd largest renewable energy producer.This reflects the result of years of dedicated efforts to harness India’s natural resources. From sprawling solar parks to wind farms and hydroelectric projects, the country has steadily built a diverse renewable energy base. These initiatives have not only reduced reliance on fossil fuels but also strengthened the nation’s energy security.
Challenges in Private Finance
The deteriorating financial health of distribution companies (DISCOMs) also affects renewable energy deployment in India. Many DISCOMs face financial distress due to mounting losses, inadequate tariffs and inefficient bill collection. These challenges prevent them from signing power purchase agreements (PPAs), stalling renewable energy projects. The backlog of unassigned PPAs delays project commissioning and creates uncertainty for renewable energy developers, impacting revenue, cash flow and financing.
Furthermore, allegations of unfair practices against prominent energy companies from time to time raise concerns about the transparency and fairness of the procurement process. These issues erode investor confidence and discourage stakeholders from investing in renewable energy projects. For DISCOMs, such challenges intensify their financial struggles. Furthermore, delayed payments to developers , including renegotiations or cancellations, deepen the strain.
