India’s renewable energy sector is on a high.
In the financial year ended March 31, 2022, a record $14.5 billion was poured into the country’s renewable and new energy industry as investments, up 125% from the previous year and 72% over the year before that, according to an Institute for Energy Economics and Financial Analysis (IEEFA) report.
“The surge in renewables investment comes on the back of the revival of electricity demand from the covid-19 lull and commitments by corporations and financial institutions to net-zero emissions and to exit fossil fuels,” said the report’s author Vibhuti Garg, an energy economist and lead India for IEEFA.
India’s renewable energy target
IEEFA, however, believes even this isn’t enough to meet India’s ambitious target of adding 400GW in renewable energy generation capacity by 2030.
India added 15.5 GW of renewable energy capacity in the financial year 2021-22, which brings the total installed renewable capacity (excluding large hydro) to 110GW as of March 2022. This is a long way from the target of 175GW by the end of this year.
“Even with the surge in investment, renewable capacity will have to expand at a much faster rate to reach the target of 450GW by 2030,” said Garg. “The Indian renewable energy sector needs about $30-US$40 billion annually to meet the 450GW target. This would require a more than doubling of the current level of investment.”
Investments in India’s renewable energy sector
The IEFFA report highlighted that key investments in the last financial year were made through acquisitions (42%). Most other big deals were packaged as bonds, debt-equity investments, and mezzanine funding, a debt-equity hybrid.
The largest deal was SB Energy’s exit, its assets worth $3.5 billion having been sold to Adani Green Energy (AGEL). The Adani Group itself plans to invest $70 billion over the next decade to become the world’s largest renewable energy producer.
Other key deals included Reliance New Energy Solar’s acquisition of REC Solar’s assets. A host of companies like Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation, and Azure Power also raised money from the bonds market.