Record US $14.5 b Investment In Indian RE In Last FY

A record US$14.5 billion was invested in renewable energy In India during the last financial year (FY2021-22) registering an increase of 125% compared to FY2020-21. However, that number still needs to be higher to meet the new demands of the renewable capacity target of 500GW by 2030. 15.5 gigawatts (GW) of renewable energy capacity was added in FY2021-22, pushing the total installed renewable capacity (excluding large hydro) to 110GW till March 2022. It is 65 GW short of the target of 175GW of renewable energy capacity by the end of this year.

A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) came out with the figure, much of which flowed through acquisitions that accounted for 42% of the total investment in FY2021-22. That focus on existing, proven assets instead of fresh capacity, is possibly the only worry in India’s quest for attracting investor interest.

Authored by Vibhuti Garg, IEEFA, the report reads further, “The surge in renewables investment comes on the back of the revival of electricity demand from the COVID-19 lull and commitments by corporations and financial institutions to net-zero emissions and to exit fossil fuels. After falling by 24% from US$8.4 billion in FY2019-20 to US$6.4 billion in FY2020-21 when the pandemic curbed electricity demand, investment in renewable energy has made a strong comeback. The Indian renewable energy sector needs about US$30-US$40 billion annually to meet the 450GW target. This would require a more than doubling of the current level of investment.”

SB Energy’s exit from the Indian renewables sector was the biggest deal by far as the assets worth $3.5 billion went to Adani Green Energy Limited (AGEL). Among the equally big investments included Reliance New Energy Solar’s acquisition of REC Solar holding assets. Besides, several companies like Vector Green, ReNew Power, Azure Power raised money in the equity and bonds market.

The report reiterated, “Investment is needed in flexible generation sources such as battery storage and pumped hydro; domestic manufacturing of modules, electrolysers; promoting electric vehicles; and promoting more decentralised renewable energy such as rooftop solar.”