India needs a Quantum jump in Renewable Energy Investments to meet Climate Targets

India has seen a sharp increase in renewable energy capacity with more than USD 70 billion being invested over the last seven years in this sector. However, in order to meet the country’s climate change commitment which is 40% of the overall power capacity to come from RE or 450 GW of power, another USD 500 billion will be required. This will mean investments in the generation sector such as solar plants and wind farms and the transmission and distribution sector, which would take RE from the generation to its actual consumption.

There are already major funds active in the sector with India allowing 100% foreign direct investment in the renewable energy sector. The concerned ministries such as MNRE and MOP as well as “Invest India” are actively promoting funding in this sector with a renewable energy investment board also having been set up. Public companies such as NTPC are planning massively aggressive targets in renewable energy with other PSUs such as IOC, GAIL, ONGC, etc also increasing their allocation to RE as well as alternative fuels. Private companies and conglomerates already have a major presence in the green energy sector. Reliance Industries the biggest private player (non-IT) which is the country’s largest oil refiner as well as having a strong presence in telecom and retailing has also planned to invest more than USD 10 billion in green technologies. It plans to aggressively scale up manufacturing such as solar panels, hydrogen, fuel cells, and storage. This would help develop a complete supply chain in the green energy sector as India is still majorly dependent on imports of capital equipment. The other conglomerates like Tata, Adani, JSW, etc. also have got major capacities and investments planned in this sector.

The government is also supporting this sector by facilitating investments by setting up giant solar and wind parks which allow the investors to get readymade land and transmission which are considered as major hurdles towards investing and building up capacities in the wind and solar energy. The production-led incentive scheme has allocated nearly USD 3.5 billion as incentives to set up solar manufacturing and advanced battery factories in the country. There are also regulations such as compulsorily buying of green hydrogen by fertilizers and refining industries which should also give a leg up to the RE industries.