India’s renewable energy sector ripe for global, domestic investments

Nagpur: India’s renewable energy sector, which is on the cusp of another growth spurt driven by the next wave of policies and reforms, offers significant investment opportunities for global and domestic investors, states the latest report by the Institute for Energy Economics and Financial Analysis (IEEFA), and non-profit venture Invest India.

The report highlights several sectoral reforms that will attract more investment to clean energy sector companies — the green energy corridor scheme, Production Linked Incentive (PLI) schemes, privatisation of state electricity distribution companies (DISCOMs), and more.

Researchers say the upcoming Union budget offers the government an opportunity to introduce these reforms and streamline policies. “Ahead of the Union Budget 2023-24, the government’s approval of an initial capital outlay of Rs19,744 crore (about US$2.43 billion) under the green hydrogen mission is the latest example of a policy push that will position India as a green hydrogen export hub and attract global investors,” says report co-author Shantanu Srivastava, who is an energy finance analyst at IEEFA.

The report further highlights three technologies offering ample space for global investments – battery energy storage systems (BESS), offshore wind, and green hydrogen.

“India plans to integrate large-scale solar and wind energy into its grid by 2030. In this context, battery storage is a vital technology solution as it allows time to shift the dispatch of solar and wind power,” says report’s co-author Amit Manohar, also the sector lead – Renewable Energy at Invest India.

Srivastava added that the government should use the Union Budget to introduce a PLI scheme for grid-scale storage to scale up domestic capacities. “It should also prioritize offering import duty waivers for setting up local battery manufacturing capacities,” he said.

The analysis also found strong potential in India’s offshore wind power segment. “Despite the slowdown, the ministry of new and renewable energy’s announcement of a 4 gigawatt (GW) tender for offshore wind power off the coasts of Tamil Nadu and Gujarat has reinvigorated the sector. Offshore wind potential in India is pegged at 195GW along the 7,600km coastline with an ability to provide utilisation factors of more than 50-55%,” says Manohar.

Besides technologies, the report also identifies some emerging trends that offer new avenues for investments in India’s renewable energy sector. “Corporate decarbonisation is a growing trend buoyed by increasing net-zero commitments by Indian companies. The booming corporate power purchase agreement (CPPA) market is catering to this demand, as witnessed by the recent spate of large CPPA deals in the country,” says Srivastava.

Other important trends include energy-as-a-service model and hybridising solar and wind power for minimising variability and optimally utilising the infrastructure.

Researchers also suggested that the government should provide incentives in the budget to facilitate the growth of manufacturing industry of wind power equipment, bringing in more domestic competition.

Of late, there has also been a push for privatising DISCOMs, which offers new investment opportunities. “Renewable energy and power sector companies can find several opportunities for value creation if state governments privatise larger DISCOMs. State governments should incentivise DISCOMs to partner with private counterparts to reduce aggregate technical and commercial (AT&C) losses and bring efficiencies to the sector,” says Srivastava.

INFOGRAPHICS

GREEN LIGHT

Renewable energy companies getting ready for sectoral reforms

India’s growth as sustainable energy economy to get accelerated

Government should introduce reforms in upcoming Union Budget

India has strong potential in offshore wind power segment

Need for privatising larger DISCOMS