Investment in India’s renewable energy sector increased by more than 125% year on year to a record US$14.5 billion in the fiscal year 2021-22 (FY22), according to a report released last week by the Institute for Energy Economics and Financial Analysis (IEEFA).
This brings corporations’ move on this sector into focus. Large companies such as Reliance Industries (RIL) and the Adani group have established ambitious plans to increase their renewable energy capability.
Acquisitions and bond offerings by these enterprises accounted for 75% of overall investment in FY22, surpassing FY20 levels, according to IEEFA. At the time (FY20), the total investment in the sector stood at US$8.4 billion, while Covid-19 outbreak caused a slump in investment activity in FY21, with the total deal value dropping to US$6.4 billion.
The increase in renewable energy investment is a result of the rebound in electricity demand following the Covid-19 lull, as well as commitments by corporations and financial institutions to achieve net-zero emissions and phase out fossil fuels, according to the report.
India added 15.5 GW of renewable energy capacity in FY22, bringing the total installed renewable capacity (excluding major hydro projects) to 110 GW by March 2022.
The Indian renewable energy market needs approximately US$30-40 billion per year to reach the federal government’s aim of 450-500 GW by 2030, and this would necessitate more than doubling the existing level of investment, the report stated.
IEEFA emphasized that the government must implement “big bang” policies and reforms to speed renewable energy deployment.
This means not only boosting investment in wind and solar generating generation, but also developing a complete ecosystem focusing on renewable energy, according to the report. Investment in flexible generation sources such as battery storage and pumped hydro, as well as transmission and distribution network development, is required. In addition, transition grid must be modernized and digitalized, the report highlighted.
