Money is pouring into the Indian green energy sector. After decades of sluggish growth for renewables in the subcontinent, the sector is finally receiving attention from investors in both the private and public sectors amidst a warming political climate. While India has enormous renewable energy potential and ambitious decarbonization goals, the developing economy has been resistant to leaving coal – a cheap, reliable, and abundant resource – behind. But as Indian politicians increasingly introduce incentives for green energy development, it looks like the country may finally be turning over a new leaf.
“The world needs India to avert climate catastrophe,” a CNN headline stated in late 2022, before asking the logical follow-up question: “Can Modi deliver?” India currently produces the third-most carbon dioxide emissions in the world, after China and the United States, and its adherence to its own decarbonization plans are therefore essential to achieving global climate goals.
Without India’s climate cooperation and climate leadership, we have no hope of keeping average global temperatures at or below 2 degrees Celsius above pre-industrial averages. But while India has made all the appropriate pledges, with the espoused goal of reaching net-zero carbon emissions by 2070, actual progress on climate goals across the subcontinent has been uneven, to put it mildly.
The country missed its 2022 target to install 175 gigawatts of renewable energy to the domestic grid, and just four of India’s 28 states met their renewable energy targets in 2022. And most of them missed them by a mile. “Most states have installed less than 50% of their targets and some states such as West Bengal have installed only 10% of their target,” the Associated Press reported. The lack of progress is discouraging for the outlook of India’s next major decarbonization milestone: installing a total of 450 gigawatts of clean energy by 2030.
But over the past several years, Indian leadership has been gradually getting more serious about going green and has employed some key policy measures to support growth of what could someday be one of the world’s predominant clean energy industries. “For the past two or three years, the investment climate has been very favourable, resulting in a significant uptick in market investment,” Vibhuti Garg, an energy economist and South Asia director at the Institute for Energy Economics and Financial Analysis, was recently quoted by the South China Morning Post.
“Private capital will not come in unless they feel their risk-return profile is favourable. The government recognises the challenges in renewable energy deployment and has initiated various schemes like the PLI (Production-Linked Incentive) scheme to boost investment,” Garg went on to say. “This has instilled confidence in investors that the government is actively supporting the sector.”
If the policy measures do indeed pay off for investors, India’s clean energy sector could be set to go gangbusters. Experts contend that India is among the countries with the greatest potential green energy production in the world. Indeed, a recent report from the Global Energy Monitor places India in the top seven countries for prospective renewable power.
This massive production potential presents a massive opportunity for Modi’s administration to place itself at the forefront of the green energy revolution, and it looks like investors are finally biting. India already has plans for gargantuan solar and wind farms in the works, and if the nation’s planned buildout of 76 gigawatts of solar and wind power by 2025 becomes a reality, India will avoid the consumption of almost 78 million tons of coal per year, leading to savings of up to 1.6 trillion rupees ($19.5 billion) annually.
Although green energy is gaining ground in India, it’s going to be very, very difficult to wean the nation’s billion residents off of coal. Fossil fuels dominate the Indian energy mix at a whopping 70%, with coal taking the lion’s share of that hefty slice of the pie. Renewables represent just 10%. According to figures from ember-data, India installed 168 gigawatts of coal-fired generation between 2001 and 2021, almost 100% more than added solar and wind capacity over the same period combined.
The scale of the challenge is enormous. Last year, a think tank out of New Delhi calculated that a just transition away from coal in India will cost around $900 billion over the next three decades. But the silver lining is that huge sums of money are currently pouring in to transform the country’s energy sector. At this month’s Vibrant Gujarat Global Summit earlier this month, Asia’s wealthiest man Gautam Adani pledged a hefty $24 billion for various green energy projects in Gujarat over the next five years, and a whopping half of the Summit’s total US$86 billion pledged was related to sustainable energy. At another state Summit this month, the Tamil Nadu Global Investors Summit, companies signed deals worth $ 9.8 billion, with a quarter of that earmarked for the energy sector. And RK Singh, the federal minister for new and renewable energy stated just this week that the Indian government will spend $116 billion on the sector over the next few years. And yes, that’s all in USD.
By Haley Zaremba for Oilprice.com
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