Energy Transition and Clean Energy Investment in India Report – 10 Key Takeaways

Several factors effect the green energy transition, such as the developmental aspect. However, the transition is becoming a reality. India’s largest Investment Banking franchise Avendus, in its latest report, Energy Transition and Clean Energy Investment in India, gives a picture of business segments emerging across the green economy value chain. The report also gives an account of global interest and sentiments in the Indian clean energy sector.

Here are 10 key takeaways in brief from the report.

#1 India’s renewable sector – a favourite investment destination…

The push for clean energy has rendered India’s renewable energy sector an attractive destination for investors. The sector attracted around Rs 823 billion ($10 billion) in annual investments over the past five years. With the country’s targets of 500 GW of non-fossil fuel-based capacity by 2030 and five million tonnes of green hydrogen per annum by 2030, international markets and investors have confidence in the country’s renewable energy sector.

As per the report, over a third of global clean energy stakeholders are interested in India. While 16 per cent consider entering India’s clean energy market, 18 per cent already operate in the country. Over 70 unique financial and strategic global investors have participated in India’s clean energy industry.

#2 Greenfield over brownfield projects…

The report suggests that the global investment interest is greater in greenfield than brownfield projects when exploring new clean energy opportunities in India. Over the last three years (2020-2022), India received investments worth $6.7 billion in 49 of its greenfield renewable energy projects.

#3 Europe is leading the investment interest in India’s renewables

India’s renewable sector looks to receive most of its investment from European countries. The survey report highlights that about 59 per cent of all the investors interested in India hailed from Europe followed by North America (29 per cent). Asia Pacific, Africa, & the Middle East, and Latin & Central America followed.

#4 IREDA at the helm of the sector’s growth…

Indian Renewable Energy Development Agency Limited (IREDA) financed over 2,900 renewable energy projects in the country with a combined capacity of 19.4 GW. To realise its ambitions, the country needs IREDA to increase its role as a provider of long-term financing.

Notably, the Mini Ratna company is taking measures with plans of public listing, an Alternative Investment Fund (AIF), and issuing green bonds to secure additional funds from domestic and international investors.

#5 Bottlenecks exist in clean energy growth in the country…

India has taken several initiatives to realise its goals for 2030, and the larger goal of carbon neutrality by 2070. However, several bottlenecks still affect investment in the green energy sector of India. This includes regulatory uncertainty, cost of capital to develop projects, price of renewable energy equipment, and rapidly changing technology.

#6 Ammonia – the carrier of choice for green hydrogen transportation…

Hydrogen needs to be stored at -253 degree celsius, which requires expensive cryogenic tanks and has a flammability hazard rating of 4. Further, the overseas transportation of hydrogen is still not commercially viable.

Several factors, such as ease of transportation, makes ammonia a better carrier of choice for green hydrogen transportation. Ammonia requires less cooling and can be stored at -34 degree celsius, and has a flammability hazard rating of 1. It also has mature and well-established transport and storage networks. Moreover, Ammonia also better Hydrogen in its seaborne trade capacity of 20 MTPA.

#7 Reduced electrolyser costs will make Green Hydrogen competitive…

The report notes that the reduced cost of electrolysers – from $500-1000/kW for alkaline electrolysers and even higher for PEM to about $250/kW – will bring down green hydrogen costs making it more competitive with other alternatives. Green Hydrogen’s current LCOP is considerably more than Blue and Grey Hydrogen. It is projected to come down to compete in the market by 2030.

Many of the large Indian conglomerates, like Reliance and Adani, expressed interest in developing electrolyser technology, large-scale manufacturing capacities, and production infrastructure. Others like Greenko and Hero Future Energies are partnering with global electrolyser companies to fast-track the technology development.

#8 CCUS Industry is expected to pick up sharply in India…

Carbon Capture, Utilisation & Storage technologies are still in their infancy in India and globally. However, carbon markets and offset/storage businesses are emerging globally. India is on the same page with companies like EKI International enabling domestic companies to find takers in offshore markets.

India’s developmental needs require the continued use of fossil fuels alongside the growth of renewables and energy storage. Thus, India needs CCUS technology to achieve carbon neutrality and the country has begun entering collaborative efforts with the US, UK, and various EU member countries to share CCUS research and technology. India’s heavy industry players like NALCO, ONGC, and BHEL, are considering investments in CCUS.

#9 Lack of public charging infra still a major barrier in EV adoption…

India is way behind other major economies in terms of EV penetration. Against the global average of 9 per cent, India still has just about 1 per cent penetration. One of the biggest factors for India’s sluggish improvement is a lack of public charging infrastructure. Currently, there are only around 2,900 public charging stations in India.

The sector needs huge financing to cover the untapped segment in India. India looks to follow the global trend. The $ 1.2 billion national mission to scale domestic EV and battery manufacturing includes the expansion of charging infrastructure from 2,000 stations currently to tens of thousands by 2030.

#10 Under penetrated electricity market will catch up…

India’s electricity market is substantially under-penetrated with just about 1,200 kWh per capita electricity consumption against the 3,300 kWh global average. Due to increasing demand driven by regulatory policies, such as household electrification drive, 24×7 power for all, EV incentives, and push for India’s manufacturing sector, the penetration of the electricity market of India is expected to catch up. As per the report, the renewable sector will be a major contributor to achieving this feat.

Independent power producers have increased their offerings to include round-the-clock power generation (using hybrid technologies), sale of power to varied end users (including hydrogen production, EV charging, etc.), energy efficiency (smart grids, smart meters, etc.) and climate risk mitigation services (such as carbon capture).

Notably, India has captured less than 10 per cent of its renewable energy potential and has about 42 per cent share of renewable energy. The share is projected to rise to about half of the total by 2030.