IEEFA S Asia: Indian solar PV exports surging, Bridging the financing gap to triple renewables capacity, Fixing Bangladesh's power sector and more

In this newsletter, we continue to explore the dynamic developments, challenges, and opportunities shaping the energy landscape across South Asia. Our focus remains on the pressing need for an accelerated energy transition, and we’ve delved into several critical areas impacting both national policies and corporate investment strategies.

We have investigated key topics related to the energy transition in the region: Join us as we unpack these key insights and highlight the strides being made towards a more sustainable energy future.

We invite everyone to stay engaged with our research, publications, and events.

Indian solar PV exports surging

KEY FINDINGS

• The export of Indian photovoltaic (PV) modules has risen exponentially by more than 23 times between Fiscal Year (FY) 2022 and FY2024, primarily to the US, which accounted for more than 97% of India’s exports in both FY2023 and FY2024.
• With the expiration of the Free Trade Agreement and an ongoing antidumping and countervailing duty investigation, India can potentially replace Southeast Asian countries to become the leading PV exporting country to the US.
• During periods of domestic supply shortage, certain distributed renewable energy segments, such as residential rooftop solar, will be affected due to their smaller order sizes.

“Focussing on the US market can benefit the Indian PV manufacturing ecosystem. The exposure to the US market will enable Indian PV manufacturers to attain economies of scale, ultimately enhancing their product quality and competitiveness,” says the contributing author of the report, Vibhuti Garg.

Read the report

Bridging the financing gap to triple renewable energy capacity

KEY FINDINGS

• Meeting the goal of tripling renewable energy capacity by 2030 faces an investment gap of up to US$400 billion annually between 2024-30. Banks, which channelled a whopping US$967 billion to the fossil fuel sector, can bridge the gap by reorienting capital to the renewable energy sector.
• While banks need to integrate climate change risks in their lending decision to reduce their exposure to fossil fuels, they also require credit enhancement support to accelerate fund flows to renewable energy projects that are not commercially viable. Governments, Multilateral Development Banks (MDBs), and bilateral financial institutions can provide risky and concessional capital for credit enhancement support.
• Since climate change is already recognised as a material risk to the financial system, central banks and regulatory bodies are issuing guidelines and formulating regulations to nudge commercial banks to integrate climate change risks into lending and risk management practices.

“While bank credit flows to the fossil fuel sector is declining, it was still a whopping US$967 billion in 2022. On the flip side, low-carbon development projects, including renewable energy, received US$708 billion in the same year. By reorienting more capital to the renewable energy sector, banks can bridge the projected investment gap,” says the briefing note’s co-author, Shafiqul Alam.

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Cementing Rajasthan’s and Gujarat’s Renewable Energy Leadership

KEY FINDINGS

• Introducing an incremental green tariff in Rajasthan and lowering Gujarat’s high incremental green tariff will attract consumers to renewable energy by providing a flexible and low-risk path to sustainable power while generating additional revenue for DISCOMs.
• Creating renewable infrastructure funds and adopting green budgeting in Rajasthan and Gujarat will secure capital for renewable projects, streamline fiscal strategies, and strengthen economic growth aligned with environmental goals.
• Scaling up distributed renewable energy (DRE) and advancing grid infrastructure will help Rajasthan and Gujarat boost renewable capacity, improve grid reliability, and reduce reliance on fossil fuels, driving a resilient transition to clean energy.

"By enabling consumers to procure renewable power at a premium, Rajasthan can drive demand for renewable energy, encouraging further investments in renewable energy infrastructure without burdening consumers with high upfront costs,” says the briefing note’s co-author Tanya Rana.

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Fixing Bangladesh's power sector

KEY FINDINGS

• While the Bangladesh Power Development Board’s (BPDB) installed power system capacity soared by 125% between June 2016 and October 2024, its financial troubles brewed due to tepid power demand growth, use of expensive fuels, limited success with renewable energy, and unfavourable economic conditions.
• During the fiscal year (FY)2019-20 to FY2023-24, the BPDB’s total annual expenditure increased 2.6-fold against revenue growth of 1.8 times, prompting the government to allocate a combined subsidy of Bangladeshi Taka (Tk)1,267 billion (US$10.64 billion).
• The power sector's reserve margin will likely reach 66.1% by December 2024, which is much higher for a country with limited renewable energy. With IEEFA's assessment showing that Bangladesh's demand may rise to 25,834MW in 2030, a system capacity of 35,239MW will be sufficient, leading to a reserve margin of 36.4% in 2030.

With the reserve margin hovering around 61.3%, Bangladesh’s power sector has an overcapacity problem which contributes to the BPDB’s persisting subsidy burden. Despite a series of power tariff adjustments, the hefty revenue shortfall and subsidy allocation will likely persist in the foreseeable future. IEEFA’s proposed roadmap for reform suggests improving power demand forecasting methods by factoring in the role of energy efficiency to reduce overcapacity,” says the report’s author, Shafiqul Alam.

Read the report

More South Asia Research:

• India's hunt for critical minerals by Charith Konda and Kaira Rakheja
• Risk-on cycle in the global economy can fire clean energy investments by Labanya Prakash Jena and Prasad Ashok Thakur
• Looking beyond COP29: How to create a roadmap for sustainable climate finance by Vibhuti Garg
• Sustainability in Asset Management in Asia: An Institutional Investor Perspective by Saurabh Trivedi and Labanya Prakash Jena
• ESG is gaining momentum with regulators in Asia, but more work lies ahead by Soni Tiwari

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