Renewable Energy in India: A Bright Future Ahead

Welcome to my new newsletter on renewable energy in India. As the country continues to attract significant investments and partnerships in the sector, we take a closer look at the current situation and what it means for the future of green energy in India.

India Shines Bright: Saving Millions in Fuel Costs with Record-Breaking Solar Energy Production

India has made impressive strides in the adoption of solar energy, with the installed total solar capacity increasing 18 times since 2014 and expected to continue growing at a staggering 35% CAGR through 2026. The country's commitment to renewable energy has already saved over 38,000 crores in fuel costs in the first half of 2022 alone. With plans to produce 100GW of solar power by the end of the year, India is poised to become a global leader in solar energy production.

India is blessed with an abundance of sunshine, with an average of 300 sunny days per year. This, combined with the fact that 12.5% of the country's landmass is ideal for solar energy production, makes it a prime location for harnessing the power of the sun

India Updates Climate Pledge Under Paris Agreement, Commits to Reducing Emissions Intensity

The new four-page document, published on 26 August, arrived two years after the original deadline – and two months before the upcoming UN climate summit COP27 in Egypt.

India has updated its climate pledge under the terms of the Paris Agreement, committing to reducing its "emissions intensity" of gross domestic product (GDP) to 45% below 2005 levels by 2030. The pledge is an update to India's first nationally determined contribution, which was submitted in 2015 and targeted a 33-35% cut. However, some have criticised the lack of a long-term strategy that reflects India's 2070 net-zero target. The country is the world's third-biggest emitter of greenhouse gases.

In addition to committing to reduce its emissions intensity, India has also pledged that around half of its installed electricity generating capacity will be made up of non-fossil fuel sources by 2030. This commitment is conditional on the transfer of technology and finance from other countries. Experts and commentators have cautiously welcomed the update, but some have criticised the lack of a long-term strategy that reflects India's 2070 net-zero target. The country is still yet to submit a strategy in this regard, and has said it plans to do so "in coming months".

Market shock v/s Demand shock: What's with Renewables?

India has emerged as a prime destination for investments and technology in the renewable energy sector. The country has seen significant partnerships and investments from global players, including the Russian Nuclear power giant Rosatom and Germany's Foreign Minister, who has proposed €1 billion in funding for 20 energy transition projects in India.

Private partnerships are also on the rise, with the Indian renewable energy developer ACME signing a $7 billion memorandum of understanding with the state government of Karnataka to develop a renewable energy facility.

A greener India is in demand

According to a report by the Institute for Energy Economics and Financial Analysis, investments in renewable energy in India hit record levels in fiscal year 2021-22, tottaling $14.5 billion. While the country's electricity demand decreased during the pandemic, it has rebounded strongly as industrial activity picked up. Extreme heat waves across the globe also pushed up demand for cooling, leading to a surge in electricity consumption.

The future looks bright for renewables in India

The demand for renewable energy in India is set to continue to grow, with the government targeting 450 GW of renewable energy capacity by 2030. This ambitious goal will require significant investment and partnerships, which are already starting to materialize.

The Indian government has also announced plans to invest $20 billion in the renewable energy sector, with a focus on solar, wind, and hydropower. This investment will be critical in achieving the country's renewable energy targets and driving the transition to a greener future.

India's Push for Renewables: RIL and Adani's Ambitious Plans

In recent months, India has seen a surge in ambition to turbocharge its renewable energy sector. Two of the country's biggest corporations, Reliance Industries Limited (RIL) and Adani Group (AG), have announced their intention to increase investment in renewables. RIL chairman Mukesh Ambani has said that the company may double its investment in clean-energy hardware manufacturing once its current plans are achieved. Last year, RIL unveiled a $10bn plan over the next three years to set up four factories in Jamnagar, Gujarat, to make solar panels, electrolyzers, fuel cells and batteries. AG has announced that it plans to invest more than $100bn in the next decade, with 70% of that going towards the energy transition space.

These investments are significant for entrepreneurs who have made their fortunes from fossil fuels. Adani Enterprises, AG's flagship entity, is the biggest coal trader in India, while the RIL conglomerate owns the world's largest oil refining hub. However, investing in renewables is not entirely new for either billionaire. Adani Green Energy Limited (AGEL), which is owned by AG, is already one of the largest renewables companies in India, with a current project portfolio of 20,434 megawatts, enough to power 16.7 million households. AGEL develops, builds, owns, operates and maintains utility-scale grid-connected solar- and wind-farm projects. Adani's foray into the green energy business began in 2015 with the announcement of the world's largest solar power plant at Kamuthi, Ramanathapuram. Meanwhile, Ambani first indicated his interest in moving into the renewable-energy space in 2015, when he joined the Breakthrough Energy group, an international coalition of 28 investors formed to bring companies with the potential to deliver affordable, reliable and carbon-free power from the research lab to the market.

There are a number of reasons why RIL and AG are competing to lead India's growth in renewables. Firstly, there has been a global shift towards renewable energy, with many oil and mining majors entering the sector due to sustained climate advocacy. The energy sector accounts for around 40% of India's total greenhouse gas emissions, with the oil industry accounting for 25%. Decarbonizing these sectors will be a priority if India is to reach its goal of being net-zero by 2070.

Secondly, the Indian government has introduced ambitious policies across the renewable-energy value chain, which are attractive to investors. For example, in its annual budget for 2022/20.?

India Needs $223bn Investment to Meet 2030 Wind and Solar Goals

According to the report "Financing India's 2030 Renewables Ambition", published by research company BloombergNEF in association with the Power Foundation of India, India will need to invest $223bn in order to meet its wind and solar capacity installation goals by 2030. The report finds that corporate commitments from Indian companies could help the country achieve 86% of its 2030 goals of building 500 GW of cumulative non-fossil power generation capacity. By 2021, 165 GW of zero-carbon generation had already been installed in India. The report also highlights the challenges facing the scaling up of renewables in India, including regulatory, project and financing risks. These include PPA renegotiation, land acquisition and payment delays, which were cited as key risks by industry stakeholders surveyed by BloombergNEF.

India's renewable energy sector is experiencing a period of rapid growth, with significant investments and partnerships coming from both the public and private sectors. The demand for renewable energy in India is set to continue to rise, and the government's ambitious targets for the sector will require significant investment to achieve. The future looks bright for renewable energy in India, and we can expect to see continued growth and progress in the coming years.