The report highlights multiple examples of international investment in India’s renewable energy projects while also noting the challenges derailing the sector.
India requires $700 bn renewable energy investment over the next decade
India will require investment between $500 billion and $700 billion in renewable energy sector and the supporting grid network over the next decade in order to meet its energy targets even as the country needs to resolve a few sovereign risk issues quickly.
These are the findings of a latest report by Australia-based Institute for Energy Economics and Financial Analysis (IEEFA). Titled "International Capital Awaits Robust Policy Environment in India’s Renewables Infrastructure Sector", the report reviews India’s energy market and finds recent policy changes favourable for renewable energy investors.
The report's author Tim Buckley -- who is the Director of Energy Finance Studies at IEEFA -- said the world is looking to invest in India’s renewable energy sector. “There has been clear momentum in India’s renewable energy capacity building in the last 24 months, leveraging the expanding opportunities in deflationary sustainable domestic projects,” he said.
He also said the country is set to reach 144 Gigawatt of renewable energy generation capacity by the end of 2021-22 and it has a clear ambition to transition to a cheaper lower emission electricity system and that ambition is attracting healthy global investment.
“Global capital flows into India will accelerate as long as the Indian government provides a clear policy framework and puts in place measures to lower risks and protect investor confidence” he added.
The report highlights multiple examples of international investment in India’s renewable energy projects while also noting a slow-down in the tendering process, grid integration constraints, and issues with excessively aggressive tariff caps on reverse auctions.
The IEEFA report said as a result of these obstacles, during FY 2018-19, India failed to capitalise on the momentum built over the previous two years through record low solar and wind tariffs. Only 10.3 GW of renewable generation capacity was added last financial year, it said.
According to the report, the proposed tariff policy revision and the payment security mechanism enhancements are both significant regulatory reforms, while removing the priority lending limit for the renewable energy sector will accelerate private bank lending to renewable energy infrastructure projects.
Energy world