Improved U.S.-India relations coupled with an aggressive White House push to advance the clear vitality transition, forward of China, is unearthing fertile floor for Indian vitality corporations to develop their U.S. presence.

At least half a dozen of India’s main renewable vitality corporations have made plans this yr to spend money on and/or construct vitality amenities within the U.S. to seize a few of the $369 billion in tax incentives supplied within the 2022 Inflation Reduction Act.

Daniel Dus, chief government of ACME Cleantech Solutions, a subsidiary of Gurgaon, India-based ACME Group stated, “When we look at where to invest dollars right now, our stated objective is to invest 40% of corporate dollars in developing assets outside of India, and the U.S. is at the very top of our list.”

“That is directly due to the Inflation Reduction Act, and other Biden policies,” he stated, citing additionally the 2021 Infrastructure Investment and Jobs Act.

ACME plans to interrupt floor in 2025 on a 1.6 gigawatt (GW) photo voltaic facility and built-in inexperienced hydrogen and ammonia facility in Port Victoria, Texas.

The firm plans to supply 1.2 million metric tons per yr of hydrogen that may be bought or transformed to ammonia for the worldwide market as early as 2027.

Because of pollution reduction mandates on the transport trade, ACME is contemplating offtake agreements with shippers changing to ammonia-based engines and gasoline, together with bunker gasoline. Offtake agreements are pre-construction offers between patrons and sellers to safe a marketplace for the builder and provide for the client.

“That is a massive amount of ammonia as a fuel that will be in demand globally,” Dus stated.

For its inexperienced hydrogen, ACME expects to obtain the U.S. authorities’s highest subsidy for hydrogen manufacturing—$3 per kilogram of inexperienced hydrogen produced.

Dus calls the tax incentive from the brand new legislation “absolutely critical,” with out which “Our project would not exist. It’s quite simple,” he stated.

The IRA tax incentive has “driven our commitment to invest tens of millions of dollars in the development of this asset,” Dus stated.

ACME can be reaching for the solar investment tax credits within the IRA. “IRA has a bunch of great bells and whistles for us,” Dus stated.

The firm is investing $120 million to arrange for development. Once it breaks floor, it expects to spend $750 million on development.

“We’ve had nothing but open arms and a welcome reception as an Indian investor and developer,” Dus stated.

ACME additionally has closed over $2 billion of financing within the final 30 days for inexperienced hydrogen initiatives in Oman and India.

The Biden administration has stated the IRA is meant to spur financial development and curb local weather change.

In November, the U.S. Department of Treasury made it clear that whereas the brand new legislation goals to extend clear vitality funding throughout the nation, it goals to drive clear vitality growth in areas which have “historically relied on fossil fuels for employment and wages.”

Other India-based renewable giants—Adani Group, Gensol Engineering, Vikram Solar, ReNew Energy Global, and Waree Energies—are additionally planning initiatives within the U.S. and particularly Texas and different fossil gasoline producing states. Collectively, they’re pouring billions of {dollars} into the U.S. economic system.

Resetting the Relationship

In June 2023, President Biden welcomed Indian Prime Minister Narendra Modi for an official state go to, the primary for India in practically 20 years. That gave Indian corporations with a renewed sense of certainty a couple of nearer relationship with the U.S.

Lucrative deals have been signed, together with multi-year, multi-billion-dollar agreements within the protection to the vitality sectors.

The two governments agreed to construct upon climate initiatives from years earlier, such because the India-U.S. Climate and Clean Energy Agenda 2030 Partnership. During the state go to, India joined the U.S.-led Minerals Security Partnership (MSP), to create vital vitality minerals provide chains.

U.S. Trade Representative Katherine Tai and the Indian authorities erased lingering trade disputes, and the U.S., seemingly in a single day, turned India’s largest buying and selling accomplice.

Amid the diplomatic overtures, regalia and celebration, many on either side felt euphoric.

It additionally helped that in July 2023, after Prime Minister Modi left the U.S., Energy Secretary Jennifer Granholm and India’s Minister of Petroleum and Natural GasGAS met in Delhi.

They established a public-private Energy Storage Task Force to scale and hasten deployment of hydrogen applied sciences by means of the public-private Hydrogen Task Force.

They additionally launched the U.S.-India New and Emerging Renewable Energy Technologies Action Platform (RETAP) to speed up improvement of unpolluted vitality applied sciences.

Officials from the Indian Embassy in Washington advised Forbes that the aim is deployment and scale.

RETAP will focus initially on inexperienced hydrogen, wind vitality, and lengthy length vitality storage, however it’ll additionally discover geothermal, ocean and tidal vitality.

Embassy officers stated, “Bilateral cooperation in energy between India and U.S. continues to grow like never before.”

Officials famous one other bilateral enhance between the U.S. and India on vitality when India hosted the G20 in Delhi in September. “As President of [the] Clean Energy Ministerial 2023 and Mission Innovation, India is looking ahead to strengthen the bilateral partnership,” embassy officers stated.

Energy Cooperation Accents Trade Opportunity

Chris Tucker, Senior Managing Director and Global Leader of Energy and Natural Resources at FTI ConsultingFCN stated, “There’s a perception that the U.S. is so much further along than India, but there’s a lot that the former can learn from the latter.”

India has one of many largest synchronous energy grids on the planet, and it’s “arguably in a lot better physical position to bring on new sources of renewables than the one we’ve got” within the United States, he stated.

“I think the opportunity is that there’s a lot to be learned from each other, especially around speed and scale,” Tucker stated. “Because without scale, none of this actually matters in the end. And for India, the world’s most populous country, scale is everything.”

“The state visit was historic and clearly intended to further cement the bilateral relationship on all fronts – strategic, defense, and trade, although trade has fallen short,” stated Mark Linscott, a nonresident senior fellow with the Atlantic Council’s South Asia Center.

Linscott was assistant U.S. commerce consultant (USTR) for South and Central Asian Affairs and assistant U.S. commerce consultant for World Trade Organization (WTO) and multilateral affairs, coordinating U.S. commerce insurance policies for the WTO.

According to the USTR, the U.S. has 14 commerce agreements with 20 international locations. However, it trades outdoors of a proper commerce settlement with 75, together with India.

“More needs to be done on the trade front to match the progress that’s been made on the strategic front,” Linscott stated.

However, Linscott stated the U.S. vitality sector has been “quite open” for India, so lack of a commerce deal between the 2 will not be at the moment a hurdle.

Wind in China’s Solar Sails

As the U.S. tries to diversify the clear vitality provide chain with Indian photo voltaic, China still dominates photovoltaic (PV) module manufacturing, accounting for practically 80% of worldwide manufacturing. A PV module converts daylight into electrical vitality.

Solar PV capacity in the US reached 111.5 GW in 2022 with a gentle improve all through the Trump and Biden administrations. However, China has about thrice the photo voltaic PV capability the U.S. has.

China is the most important producer of photo voltaic vitality. The U.S. ranks second.

According to the Solar Energy Industries Association, photo voltaic demand and use within the U.S. is up. Most of that development has been within the utility sector, adopted by the residential market.

The commerce group, which represents the broad swath of photo voltaic stakeholders, attributes the expansion to sustained federal assist, particularly the Investment Tax Credit, which has decreased the price of photo voltaic expertise, elevated capability and demand.

SEIA stated 45% of all new electrical capability added to the grid this yr has come from photo voltaic, which now represents 5% of U.S. electrical energy manufacturing, an enormous improve from a decade in the past when it was 0.1% in 2010.

Because of this demand, the Biden administration is looking for assets the place it will probably, outdoors of China; the President’s fair-trade insurance policies limit U.S. corporations from importing supplies from China.

This is the place India is available in.

“Accelerating the transition, creating the supply chain, and not becoming more dependent on China,” is the intention of the IRA, stated Chris Guith, senior vp on the US Chamber of Commerce Global Energy Institute in Washington.

Global funding in renewable vitality, electrical automobiles (EVs) and battery storage expertise has leaped to its highest, the International Energy Agency stated in its World Energy Investment 2023 report, which supplies a full image of 2022 and a few view of 2023 investments globally.

Global funding in renewable energy in 2023 is predicted to complete about $695 billion with EV and battery storage expertise rising to $129 billion and $37 billion, respectively.

Much of that funding is coming from India and the Middle East, specifically Saudi Arabia, United Arab Emirates, Oman. Brazil can be investing closely.

Raising Rupees by means of the Sun

According to a Mordor Intelligence report, the photo voltaic PV section in India is predicted to have the most important market share of all renewable vitality over the following a number of years.

India’s put in photo voltaic PV capability was simply over 66 GW in 2022, a 31% improve from practically 50 GW in 2021 due to new installations for utility initiatives, the price of photo voltaic modules lowering and assist from the Indian authorities, which inspires renewable energy technology throughout the nation. Installed photo voltaic capability is predicted to extend to 191 GW by 2028.

By lowering its fossil gasoline imports and powering the subcontinent with its personal renewable vitality, India naturally strengthens its forex, the rupee, towards the US greenback, Dus stated.

That’s an incentive in and of itself to broaden to the U.S. market.

“A lot of folks in the US have had a conception of India in the past that it is a little sleepier than the reality of India on the ground today. India is absolutely exploding. The economy is exploding,” Dus stated.

“The amount of infrastructure being built out domestically, the quality of folks being graduated from top schools is absolutely world class. The United States is becoming more and more aware of that, which helps deepen the relationship. There is nothing but tailwinds here,” he stated.

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