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India's renewable energy sector is constantly creating new records, which is good news from an energy as well as climate point of view. Recently, a new report released on investment in this sector has revealed that during the financial year ended March 31, 2022, a record investment of more than Rs 1.13 lakh crore has been made in this sector.
In the fiscal year ending March 31, 2022, a record $14.5 billion was invested in the nation's new and renewable energy industry as investments, up 125% from the prior year and 72% higher than the prior year, according to an Institute of Energy Economics. and financial analysis (IEEFA).
Net-zero emissions
“The increase in investment in renewable energies is due to the reactivation of the demand for electricity due to the pause of covid-19 and the commitments of corporations and financial institutions with net-zero emissions and the abandonment of fossil fuels”, said the report's author, Vibhuti Garg, an energy expert. economist and director of India for IEEFA.
Conglomerates such as Reliance Industries (RIL) and the Adani group have ambitious plans to increase their renewable energy capacity. Buyouts and bond issues by a host of companies, including RIL and Adani, made up 75 per cent of total investment value in FY22, IEEFA said, exceeding FY20 levels. At that time (FY20), total investment in the sector stood at $8.4 billion, while FY21 saw a drop in investment activity due to COVID-19, with a total value of the operation that reached 6400 million dollars.
The biggest deal in FY22 was SB Energy's exit from the Indian market with a $3.5 billion asset sale to Adani Green Energy (AGEL), part of the Adani group, in October last year. Around the same time, Reliance New Energy Solar, a subsidiary of RIL, acquired REC Solar Holdings for $771 million. Among the bond issues, key ones included those by companies such as Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation and Azure Power, IEEFA said.
“The increase in investment in renewable energy is due to the reactivation of electricity demand due to the Covid-19 pause and the commitments of corporations and financial institutions to net-zero emissions and the abandonment of fossil fuels”, Vibhuti Garg, energy economist and leader, India, IEEFA, said.
- Investment in renewable energy in India reached a record US$14.5 billion in the last financial year (FY2021-22).
- Investment in renewables increased by 125% compared to FY2020-21 and 72% over pre-pandemic FY2019-20.
- The surge in investment comes on the back of the revival of electricity demand after the COVID-19 slump and commitments by financial institutions to exit fossil fuels.
- Investment will have to more than double to US$30-US$40 billion annually for India to reach its target of 450GW of renewable energy capacity by 2030.
India’s renewable energy target
India aims to achieve an installation of 450 gigawatts (GW) of renewable energy capacity by 2030 to decarbonize its energy sector, while maintaining its commitment to become a net-zero emissions country by 2070. Currently, the installed capacity of renewable energy of India is 111.39 GW. According to the latest data, India in the last fiscal year (2021-22), added 15.5 GW of renewable energy capacity with an investment of $14.5 billion (Rs. 11,338.8 crore) in the sector.
The CEEW study 'India Energy Policy Mapping 2022' stated that, in 2017, the subsidy for the renewable energy sector stood at Rs.16,312 crore (Rs 163.12 billion), but in the last fiscal year (2021-22) was reduced to Rs. 6,767 crore (67,670 crore).
However, during the same period, subsidies for electric vehicles almost tripled. The report emphasized that the main support for clean energy projects in the country was through Non-Bank Financing Companies (NBFCs) and selected private banks, while investments from public sector lenders went more towards clean energy projects based on fossil fuels.
Investments in energy sector in India
Most of the money flowed through acquisitions, which accounted for 42% of total investment in FY2021/22. Most of the other major deals were packaged as bonds, debt, equity investment and mezzanine financing.
The biggest deal was the exit of SB Energy from India's renewables sector in October 2021 with a $3.5bn asset sale. Other key deals included Reliance New Energy Solar's acquisition of assets owned by REC Solar and a number of companies such as Vector Green, Adani Green, ReNew Power, Indian Railway Finance Corporation, Azure Power raising money on the bonds.
Other key deals included the acquisition of REC Solar's assets by Reliance New Energy Solar. A host of companies including Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation and Azure Power also raised money from the bond market.
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