New Delhi: The Investment in the renewable energy sector in India has reached a record $14.5 billion in the last fiscal year (2021-22) which is an increase of 125 percent as compared to 2020-21, as per the Institute for Energy Economics and Financial Analysis (IEEFA) report.
IEEFA, however, believes even this isn’t enough to meet India’s ambitious target of adding 400GW in renewable energy generation capacity by 2030.
“The surge in renewables investment comes on the back of the revival of electricity demand from the covid-19 lull and commitments by corporations and financial institutions to net-zero emissions and to exit fossil fuels,” said the report’s author Vibhuti Garg, an energy economist and lead India for IEEFA.
India added 15.5 GW of renewable energy capacity in the financial year 2021-22, which brings the total installed renewable capacity (excluding large hydro) to 110GW as of March 2022. This is a long way from the target of 175GW by the end of this year.
“Even with the surge in investment, renewable capacity will have to expand at a much faster rate to reach the target of 450GW by 2030,” said Garg.
“The Indian renewable energy sector needs about $30-US$40 billion annually to meet the 450GW target. This would require a more than doubling of the current level of investment,” he added.
The IEFFA report also highlighted that key investments in the last financial year were made through acquisitions (42%). Most other big deals were packaged as bonds, debt-equity investments, and mezzanine funding, a debt-equity hybrid.
The largest deal was SB Energy’s exit, its assets worth $3.5 billion having been sold to Adani Green Energy (AGEL). The Adani Group itself plans to invest $70 billion over the next decade to become the world’s largest renewable energy producer.
Other key deals included Reliance New Energy Solar’s acquisition of REC Solar’s assets. A host of companies like Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation, and Azure Power also raised money from the bonds market.
India added 15.5 gigawatts (GW) of renewable energy capacity in FY2021-22, which brings the total installed renewable capacity (excluding large hydro) to 110GW as of March 2022 – a long way off the target of 175GW of renewable energy capacity by the end of this year.
Even with the surge in investment, renewable capacity will have to expand at a much faster rate to reach the target of 450GW by 2030, says Garg. Rapid growth in renewable energy capacity will be needed to meet India’s increasing electricity demand.
To move to a sustainable pathway and reduce reliance on expensive fossil fuel imports, Garg says the government needs to act as an enabler by rolling out ‘big bang’ policies and reforms to accelerate the deployment of renewable energy.
“This means not only increasing investment in wind and solar power capacity, but also in creating an entire ecosystem around renewable energy,” she said.
“Investment is needed in flexible generation sources such as battery storage and pumped hydro; expansion of transmission and distribution networks; modernization and digitalization of the grid; domestic manufacturing of modules, cells, wafers, and electrolyzers; promoting electric vehicles; and promoting more decentralized renewable energy such as rooftop solar,” she said.
