RK Singh, the federal minister for brand new and renewable power, on Monday stated the federal government had earmarked a whopping 9.65 trillion rupees (US$116 billion) in direction of the sector over the following few years.

Can Red Sea attacks speed up Southeast Asia’s clean energy transition?

What underscores this sequence of investments is the substantial monetary dedication to renewable power efforts. With an insatiable urge for food for power throughout industries, India has been fortifying its renewable power methods, aligning with formidable targets to cut back carbon emissions.

Vibhuti Garg, an power economist and South Asia director on the Institute for Energy Economics and Financial Analysis stated: “For the past two or three years, the investment climate has been very favourable, resulting in a significant uptick in market investment.”

According to authorities figures, the renewable power sector attracted greater than US$6.1 billion in overseas direct funding between April 2020 and September 2023.

“Private capital will not come in unless they feel their risk-return profile is favourable. The government recognises the challenges in renewable energy deployment and has initiated various schemes like the PLI (Production-Linked Incentive) scheme to boost investment,” Garg added. “This has instilled confidence in investors that the government is actively supporting the sector.”

Ambitious targets

In November 2021, Prime Minister Narendra Modi’s authorities pledged that India would obtain net-zero emissions by 2070. The authorities additionally dedicated to attaining not less than half of its power necessities from renewable sources by 2030.

Various schemes and coverage changes have been launched to bolster this dedication, with a give attention to reinforcing the renewable power sector.

While coal stays the first power supply, greener sources similar to wind, photo voltaic, hydropower and biofuel are gaining traction. Currently, non-fossil sources contribute round 43 per cent of the entire power portfolio for the nation’s energy consumption, a quantity that has steadily risen in recent times.

In January final yr, the central authorities unveiled the National Green Energy Mission, aiming to make India the “global hub for the production, usage and export of green hydrogen”. This scheme was supported by an preliminary authorities outlay of over US$2 billion.

The authorities can also be putting important bets on evolving applied sciences in power storage methods.

Moving the coal posts: China and India’s uneasy green transition

Multiple analysis experiences launched prior to now six months forecast huge funding alternatives within the renewable power sector. For occasion, a report by Ernst & Young and the Confederation of Indian Industry revealed in October estimated India’s renewable power sector’s cumulative funding potential to be greater than US$240 billion.

Addressing challenges

While progress is clear, some challenges persist. Issues such because the monetary well being of state-run distribution firms, or discoms, in India have been addressed prior to now two years as a result of numerous subsidies and free energy provide schemes. The loss margin among the many discoms was at 24 per cent in 2014 however regularly decreased to 14 per cent within the final yr.

However, considerations concerning the power of transmission infrastructure and the monetary losses of discoms stay.

Kapil Bansal, a companion at Ernst & Young India specializing in power transition and decarbonisation, stated the potential challenges to buyers’ confidence embrace “land acquisition, constant technological advancement, upfront costs without subsidy, and infrastructure constraints”.

He urged that coverage initiatives similar to tax credit and investment-based incentives for different renewable sources like wind have been essential to addressing these challenges and propelling additional progress within the total power sector within the coming years.

Challenging China in photo voltaic PV sector

Heymi Bahar, a senior power analyst on the International Energy Agency, famous: “From our analysis, India is placed as either the third or fourth-largest country in terms of attracting investment into renewable energy.”

Policies such because the aggressive public sale scheme, authorities tenders with extra readability and aggressive costs supplied a strong framework for the trade to develop, he added.

Bahar identified that India was effectively positioned to problem China within the manufacturing of photo voltaic panels. “India is the second-largest [recipient of] investment after China for the solar photovoltaic (PV) manufacturing sector. This is extremely important because China is super advanced in this area,” Bahar stated.

India’s photo voltaic PV manufacturing sector has witnessed substantial investments, supported by a transparent coverage framework and regulatory approvals.

“These are made-in-India solar PV panels, not just assembled in India. India will not only supply the domestic demand but also will export. We’ll see, in the next two to three years, India becoming the largest competitor of China in solar panel manufacturing,” Bahar predicted.