The Indian government has repeatedly been calling for the world’s richest countries to help develop its clean energy industry to support a global green transition. India has significant renewable energy potential, from wind and solar to tidal and hydropower resources, but it requires high levels of funding to effectively tap into these resources. As one of the world’s most rapidly developing economies and with a population of 1.39 billion – second only to China – India’s sustainable development is a vital part of achieving the world’s climate goals and ensuring its energy security.
In 2022, India announced that it was aiming to achieve net-zero carbon emissions by 2070, as well as to meet 50 percent of its electricity needs from renewable energy sources by 2030. If achieved, this would strongly support goals laid out in the Paris Agreement and the previous two COP climate summits. As India rapidly develops its economy, it has the option of pursuing a traditional, carbon-intensive approach to industrialisation or a sustainable, decarbonised method, but this depends heavily on the investment India can attract in both its energy sector and its industries. If done successfully, India’s development could provide the blueprint for other emerging economies to follow.
For the last two decades, India’s economic growth has been one of the world’s highest, helping to significantly reduce poverty. It is becoming more urbanised, developing new buildings, factories, and transport networks. But this has been strongly supported by energy sources such as coal and oil, meaning that India’s greenhouse gas emissions have grown as it has modernised, to become the third-highest emitter in the world. India’s energy demand is set to grow by more than any other country over the next few decades due to its population growth and industrial development, making it vital to introduce a range of clean energy sources to the mix. Related: Russia Says It Will Study Iran’s Plan To Create A Natural Gas Hub
India’s Prime Minister Narendra Modi announced some ambitious climate targets last year, such as installing 500 gigawatts of renewable energy capacity, reducing the emissions intensity of its economy by 45 percent, and reducing a billion tonnes of CO2 by the end of the decade. In 2022, in the REN21 Renewables Global Status Report, India was ranked fourth in the world for its installed renewable energy capacity, as well as fourth in wind and solar power capacity. And by the beginning of 2023, India had a combined installed renewable energy capacity of 178.79 GW. This included 42.6 GW of wind power, 66.7 GW of solar, 10.2 GW of biomass, 46.85 GW of large hydropower, 4.94 GW of small hydropower, and 0.55 GW of waste to energy.
The government hopes to build upon India’s success in renewable energy through the accelerated development of a wide range of green energy projects over the coming decades. India has become the fastest in renewal energy capacity addition among the world’s major economies. In 2014, its renewable energy capacity stood at 20 GW, to achieve 100 GW by 2022, a figure that it far surpassed. And now, the Bank of America is anticipating huge levels of investment in India’s renewable energy sector over the coming decades to increase this capacity much further.
The co-head of investment banking for Bank of America in India, Debasish Purohit, stated this month that investment in the Indian green energy sector could reach as much as $800 billion over the next decade, as the world strives for a global green transition. This funding will come from a range of sources, from private Indian firms to foreign investors. Financing India’s green transition could not only be key to global net-zero aims but could also help investors looking to offset their carbon footprint through a range of projects. The investment bank suggested that the renewable energy sector could achieve around $250 billion in investment in the next decade, with the battery storage sector gaining around $250 million - supporting the development of grid infrastructure – and green hydrogen attracting around $300 billion.
The Bank of America has already facilitated a high level of development in green energy projects in India by advising several high-profile companies. It supported Actis LLP in its $1.6 billion sale of Sprng Energy to Shell and TPG Rise on its $1 billion investment in Tata Motors’ electric vehicle business.
And the government is already working on attracting more investment in the renewable energy sector. In April, India announced that it planned to issue tenders for the installation of 250 GW of green energy capacity by March 2028. This increase in renewable energy capacity is vital to India achieving its climate pledges, with one study suggesting that India must add at least an additional 180 GW of renewable-based capacity from 2022 to 2027. This equates to 131 GW of solar power, 33 GW of wind, 10 GW of large hydropower and 2 GW of biomass.
India has huge potential to accelerate its renewable energy development in line with a global green transition, but it will require a significant amount of private and foreign investment to achieve this goal. As one of the world’s fastest-growing economies and populations, it is vital that the world’s richest nations support investment in India’s green energy sector, as well as a decarbonised approach to industrialisation.
By Felicity Bradstock for Oilprice.com
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