The government’s renewable targets would require investments of USD 151 billion for setting up additional 345 GW capacities by FY2030 even after assuming a lower capital cost of Rs. 35 million per megawatt, Kotak Mahindra Bank said in a report.
The bank in the report stated that renewable targets offer the potential to scale up local solar photovoltaic (PV) cell manufacturing.
"India has several solar PV cell manufacturing companies although their current capacities are small. We see several positive factors, such as reasonable economics and government incentives that make us believe that Indian companies will be able to participate in this opportunity," it stated.
However, Kotak said do not see ambition or capital as a constraint for Indian companies, with companies such as Adani Solar, Reliance Industries and Tata Power Solar keen on the space.
In particular, Reliance Industries has announced ambitious plans to invest Rs 600 billion over three years to set up four Giga factories with respect to the entire solar energy ecosystem.
"That said, we believe the ambitious rollout of renewable energy will be detrimental to the prospects of coal-based power generation capacities and also Coal India’s growth ambitions," it stated.
As India intends to roll out carbon pricing as one of the key strategies to reduce emissions, the report also mentioned that companies across sectors will witness an impact. Notably, the bill for the rollout of carbon pricing has already been approved by the lower house of parliament and will be tabled in the upper house in the upcoming winter session.
"The rollout of carbon pricing will impact the cost dynamics and capital intensity of carbon-intensive sectors, such as power, metals and cement," it stated. Players managing their emissions efficiently in these sectors — JSW Energy, Tata Steel, ACC, etc. in the current scenario — could gain at the cost of others, according to the report.
Capital goods companies like ABB, Siemens, Thermax, L&T, Cummins, KEC and KPTL are likely to benefit from the energy efficiency in industries and buildings, the higher share of renewables in the energy mix and emission control in highly polluting industries, it added.
