An EY report calculates that investments approximately worth USD 240 Billion are in the pipeline in the renewable energy sector.
Key Highlights
- The Green Hydrogen sector has investments worth INR 7.96 lakh crores in the pipeline.
- Supply-side initiatives like Production-linked incentives serve as enablers for growth.
- The report mentions that the affordability of renewable energy remains a challenge.
In a report released last week with the Confederation of Indian Industry (CII), Ernst and Young (EY) has estimated the investments towards energy transition in the country to be approximately worth USD 240 billion.
The report mentions that several supply-side initiatives like Production-linked incentives (PLI), energy purchase obligations, central procurement, land pooling, and labour market reforms among other factors have helped create a conducive ecosystem for investments in the energy transition markets.
The renewable energy sector, as construed in the report constitutes Green Storage, Advanced Chemical Cell (ACC) Battery Manufacturing, Grid-Scale Renewable Energy Generation, Green Hydrogen, Ethanol Production, Solar PV modules and Wind Turbine Manufacturing, and Compressed Biogas.
According to the report, the Green Hydrogen sector occupies the largest share of investments among all, with investments in 51 projects worth INR 7.96 lakh crores in the pipeline in the current scenario. This would amount to an annual production of around 10.17 MT of Green H2/Ammonia.
It is followed by the Grid-Scale Renewable Energy Generation sector with investments worth INR 5.36 lakh crores spanning over 275 projects, with INR 3.75 lakh crores in the form of debt, and the rest in the form of equity.
Given the country’s commitment at the Conference of the Parties (COP26) to the UNFCCC summit to meet 50% of its energy demand through renewable energy sources by 2030, the report serves as an illuminator for the status quo in the renewable energy sector.
Highlighting the supply-side measures taken by the government to achieve its carbon emission targets, the report mentions that to play a pivotal role in supply-chain resilience for renewable technologies, India has to address some demand-side measures like affordability and inconsistent policies, among other factors.
The report however has estimated developments in the pipeline till March 2023 and may not have covered all the ongoing low-carbon infrastructural projects.
What are the growth prospects for Renewable Energy businesses in India?
The Renewable Energy sector in India has added approximately 63 GW of Renewable Energy (RE) capacity in the past 5 years, making it the 3rd largest in terms of capacity addition over the specified period.
The government has committed to reaching the milestone of around 500 GW of non-fossil energy generation capacity by 2030. As of February 2023, India had a total RE capacity of 168.96 GW.
According to the International Energy Agency (IEA), around 18% of the energy generated within the country will be through solar sources by 2030. As of now, the share solar energy occupies in the basket is around 6 per cent.
A recent stocktake reckons the solar energy capacity in India to be around 70,000 MW with Rajasthan contributing around 17,839 MW to it.
Given how important it is for the country to meet its projected energy demand, that too sustainably, the government has launched a PLI Scheme for High-efficiency Solar PV modules and a PLI Scheme for Advanced Chemistry Cell.
In addition, the government is planning to launch a PLI scheme for Green Hydrogen.
With the magnitude of the thrust by the government and specialised schemes to fillip production, the renewable energy sector is poised for high growth in the near term. Thus, auxiliary industries and businesses functioning within the sector will certainly benefit from the projected growth.
However, demand-side constraints, as was also mentioned in the report function as a challenge to overcome. In addition, it is important for the country to insulate its supply chain from geopolitical shocks to ensure that the pace of growth is not affected.
