According to research from the Institute for Energy Economics and Financial Analysis (IEEFA), India invested a record $14.55 billion in renewable energy in the past fiscal year, up 125 % over the pre-pandemic previous year, which saw a 72 % increase.
“The spike in renewables investment is due to a rebound in power consumption following the Covid-19 slump, as well as vows by companies and financial institutions to achieve net-zero emissions and phase out fossil fuels,” said Vibhuti Garg, the report’s author.
“Investment in renewable energy has made a remarkable recovery after declining by 24% from $8.4 billion in FY20 to $6.4 billion in FY21 as the pandemic curtailed power demand.”
The majority of the funds were invested in acquisitions, which accounted for 42% of all investments in FY22. Bonds, debt-equity investments, and mezzanine financing were the most popular sources of capital for other large transactions.
SB Energy departed the Indian renewable energy sector with a $3.5 billion asset sale to Adani Green Energy in the biggest deal.
Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation, and Azure Power raised money in the bond market, while Reliance New Energy Solar bought REC Solar’s holding assets.
In FY22, the government added 15.5 GW of renewable energy capacity, bringing total installed renewable energy capacity (excluding large hydro) to 110 GW as of March 2022, much below the objective of 175 GW.
Even with the spike in investment, renewable capacity would have to develop at a far quicker rate to achieve 450 GW by 2030, according to Garg.
“To fulfill the 450 GW objective, India’s renewable energy sector would require $30-40 billion per year.” “This would need a more than doubling of existing investment,” she explained.
The rising demand for power in India would need rapid growth of renewable energy generation. Garg believes that the government must act as a facilitator by enacting “big bang” policies and reforms to speed the deployment of renewable energy in order to reach a sustainable route and minimize dependency on expensive fossil fuel imports.
“This entails not just expanding investment in wind and solar power generation, but also establishing a sustainable energy ecosystem,” she explained.
“Investment is needed in flexible generation sources like battery storage and pumped hydro; expansion of transmission and distribution networks; grid modernization and digitization; domestic manufacturing of modules, cells, wafers, and electrolyzers; promoting electric vehicles; and promoting more decentralized renewable energy sources like rooftop solar,” Garg added.
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