Renewables are crucial for India's long-term climate goals, but they need a ₹17.5 Lakh crore investment by 2030!
Jun 30, 2022, 12:44 IST
Some parts of India recently witnessed a crippling power crisis amid the searing summer heat waves this year due to the coal shortage. India's yearly coal usage exceeds one billion tonnes, and the country's coal reserves plunged 17% last month. The coal crisis is not limited to a few parts, as 108 of the 173 thermal coal-fired power facilities across India were estimated to have critically low coal inventories last month.
To meet its goal of wind and solar capacity installations by 2030, India must invest $223 billion (₹17.6 lakh crore), as per a new research report by BloombergNEF (BNEF).
Our energy-thirsty nation is investing heavily in sustainable and renewable energy sources like solar and wind to fulfil the exponentially growing energy requirement. As the world battles the climate crisis in terms of scorching temperatures, extreme weather events, species extinction, increasing sea levels, as well as poverty and displacement, India is taking steps to reduce its carbon footprint and achieve five decarbonisation targets announced by Prime Minister Narendra Modi at COP26 in November 2021.
India has continuously rated among the top emerging renewables markets by Climatescope, a BNEF initiative that evaluates country-wise investments in clean energy across the globe. India has attracted international and national investors in the renewable power market with its transparent market mechanisms, supportive policies and ambitious government targets. Last year, India was ranked first among 107 emerging renewable markets.
Shantanu Jaiswal, lead author of the report and head of India research at BloombergNEF, said: "To date, the growth of renewable energy in India has been funded by a diverse set of financiers. Debt and equity structures have evolved as the market grew and new risks emerged. India's ambitious renewable energy targets now require further scaling up of financing with new instruments and learnings from other global markets."
Despite ambitious targets and favourable market conditions, India’s path towards renewable and clean energy self-sufficiency is riddled with multiple legal and financial challenges like power purchase agreement renegotiations, complex land acquisition hurdles, and payment delays, says BNEF report. Rising loan rates, a weakening rupee, and high inflation also make funding renewables difficult in the near future.
With the monetary challenges chaperoning the way of sustainability in India, the goal of optimum renewable energy production seems too ambitious. To reach the 2030 targets, Independent Power Producers must tap into new or underused funding sources like construction debt, investment infrastructure trusts, as well as retail investors, insurance firms, and pension funds, experts recommend. India needs a pool of circulating investment to reach its 2030 targets, and the private power producers utilizing these underused sources could be a significant part of India’s renewable success story.
Higher finance requirements necessitate actions that can boost financing availability, such as de-risking renewable projects and giving contractual conditions that provide better investor comfort. India has a calibre of fulfilling its renewable energy goals by 2030 with the assistance of corporate commitments from Indian companies and the massive deployment of zero-carbon energy technologies across the country. The Power Foundation of India also reported earlier that the country's reliance on fossil fuels could fall sharply when it infuses solar and wind energy into its total capacity.
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But the question is, given how carbon-intensive coal is, how long can we rely on this ‘dirty’ fuel? Fortunately, India aims to install renewable energy capacity to 175 gigawatts by 2022 and 500 GW by 2030. Moreover, India’s commitments under the Paris Agreement obligate us to fulfil 50% of electricity demand with renewable energy, making renewable energy crucial to achieving the country's 2030 and 2070 climate objectives.But how much would the country need to invest to achieve these ambitious targets?
To meet its goal of wind and solar capacity installations by 2030, India must invest $223 billion (₹17.6 lakh crore), as per a new research report by BloombergNEF (BNEF).
Our energy-thirsty nation is investing heavily in sustainable and renewable energy sources like solar and wind to fulfil the exponentially growing energy requirement. As the world battles the climate crisis in terms of scorching temperatures, extreme weather events, species extinction, increasing sea levels, as well as poverty and displacement, India is taking steps to reduce its carbon footprint and achieve five decarbonisation targets announced by Prime Minister Narendra Modi at COP26 in November 2021.
India has continuously rated among the top emerging renewables markets by Climatescope, a BNEF initiative that evaluates country-wise investments in clean energy across the globe. India has attracted international and national investors in the renewable power market with its transparent market mechanisms, supportive policies and ambitious government targets. Last year, India was ranked first among 107 emerging renewable markets.
Shantanu Jaiswal, lead author of the report and head of India research at BloombergNEF, said: "To date, the growth of renewable energy in India has been funded by a diverse set of financiers. Debt and equity structures have evolved as the market grew and new risks emerged. India's ambitious renewable energy targets now require further scaling up of financing with new instruments and learnings from other global markets."
Despite ambitious targets and favourable market conditions, India’s path towards renewable and clean energy self-sufficiency is riddled with multiple legal and financial challenges like power purchase agreement renegotiations, complex land acquisition hurdles, and payment delays, says BNEF report. Rising loan rates, a weakening rupee, and high inflation also make funding renewables difficult in the near future.
With the monetary challenges chaperoning the way of sustainability in India, the goal of optimum renewable energy production seems too ambitious. To reach the 2030 targets, Independent Power Producers must tap into new or underused funding sources like construction debt, investment infrastructure trusts, as well as retail investors, insurance firms, and pension funds, experts recommend. India needs a pool of circulating investment to reach its 2030 targets, and the private power producers utilizing these underused sources could be a significant part of India’s renewable success story.
Higher finance requirements necessitate actions that can boost financing availability, such as de-risking renewable projects and giving contractual conditions that provide better investor comfort. India has a calibre of fulfilling its renewable energy goals by 2030 with the assistance of corporate commitments from Indian companies and the massive deployment of zero-carbon energy technologies across the country. The Power Foundation of India also reported earlier that the country's reliance on fossil fuels could fall sharply when it infuses solar and wind energy into its total capacity.
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