Investments in India’s renewable energy sector grew 125 per cent year-on-year to a record $14.5 billion in the financial year 2021-22 (FY22), said a report in early June.
Conglomerates such as Reliance Industries (RIL) and the Adani group have plans to ramp up their renewable energy capacity. Acquisitions and bond issues by RIL, Adani and other companies constituted 75 percent of the total value of investments in FY22, said the report by Institute for Energy Economics and Financial Analysis (IEEFA).
In FY20, total investment in the sector stood at $8.4 billion. FY21 saw a fall in investments, due to Covid-19, with the total deal value touching $6.4 billion.
The largest deal in FY22 was SB Energy’s exit from the Indian market with a sale of assets worth $3.5 billion to Adani Green Energy Limited (AGEL), part of the Adani group, in October last year. Around the same time, Reliance New Energy Solar, a subsidiary of RIL, picked up REC Solar Holdings for $771 million. Among bond issues, key ones included that of companies such as Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation and Azure Power, IEEFA said.
"The increase in renewable energy investment comes on the back of the revival in electricity demand from the Covid-19 lull and commitments by corporations and financial institutions to net-zero emissions and to exit fossil fuels,” said Vibhuti Garg, energy economist, and lead, India, IEEFA.
India added 15.5 gigawatts (GW) of renewable energy capacity in FY22, Garg said, which brought the total installed renewable capacity (excluding large hydro projects) to 110 GW as of March 2022.
Even with the surge in investment, renewable energy capacity would have to grow at a much faster rate to reach the target of 450-500 GW, set out by the government, by 2030, IEEFA said.
“The Indian renewable energy sector needs about $30-40 billion annually to meet the 450 GW target. This would require a more than doubling of the current level of investment," Garg said.
IEEFA says that for a sustainable energy transition, the government would have to roll 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,” Garg said.
“Investment is needed in flexible generation sources such as battery storage and pumped hydro as well as expansion of transmission and distribution networks. At the same time, modernization and digitalization of the grid is required with focus on the domestic manufacturing of modules, cells, wafers and electrolyzers. Apart from promoting electric vehicles, there is also a need to push rooftop solar aggressively,” she said.
