India’s renewable energy sector offers significant investment opportunities for global and domestic investors, according to a new joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and Invest India.
Several reforms will attract more investment to Indian renewable energy sector companies. The reforms include the green energy corridor scheme, Production Linked Incentive (PLI) schemes, state electricity distribution companies (DISCOMs) privatisation and more.
“Ahead of the Union Budget 2023-24, the government’s approval of an initial capital outlay of Rs19,744 crore ($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, Energy Finance Analyst, IEEFA.
Investors would now be looking forward to a detailed breakup of the outlay for the PLI scheme for green hydrogen production and electrolyser manufacturing under the Strategic Interventions for Green Hydrogen Transition (SIGHT) program of the green hydrogen mission.
India plans to integrate large-scale solar and wind energy into its grid by 2030. “Battery storage is a vital technology solution as it allows time to shift the dispatch of solar and wind power,” says the report’s co-author Amit Manohar, Sector Lead – Renewable Energy, Invest India.
The government should look to use the Union Budget to introduce a PLI scheme for grid-scale storage to scale up domestic capacities. The government should also look to offer import duty waivers in the Budget for setting up local battery manufacturing capacities.
The Ministry of New and Renewable Energy’s announcement of a 4GW 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 percent.
Government should provide tax and non-tax incentives in the Union Budget to facilitate offshore wind projects’ growth, similar to what it did for solar and onshore wind in the past.
Corporate decarbonisation is a growing trend buoyed by increasing net-zero commitments by Indian companies. The booming corporate power purchase agreement (PPA) market is catering to this demand, as witnessed by the recent spate of large CPPA deals.
Energy-as-a-service model, which offers high margins and growth prospects in a fast-evolving energy economy, is seeing rapid adoption. Energy efficiency services, demand side management and cloud energy storage offerings are just a few of the new offerings under this model.
The other key emerging trend is that of hybridising solar and wind power for minimising variability and optimally utilising the infrastructure.
With an installed capacity of approximately 104GW of wind and solar to date, the renewable energy sector is making strides to provide solutions for the intermittency of the two generation sources. The government has now released tenders for renewable energy auctions for round-the-clock and hybrid projects.
India Government should provide incentives in the budget to facilitate the growth of the wind power equipment manufacturing industry and bring in more domestic competition. This will help invigorate the wind-solar hybrid market.
India government should look at providing financing support in the budget for industrial decarbonisation – the next frontier for energy transition in the country. Rolling out sovereign sustainability-linked bonds linked to India’s updated Nationally Determined Contributions, is a viable option.