Investment In Renewable Energy In India Touched A Record $14.5 Billion In FY2021-22, 15.5 GW Capacity Added: Report

Investment in renewable energy in India touched a record US$14.5 billion in the last financial year (FY2021-22), an increase of 125% compared to FY2020-21 and 72% over pre-pandemic FY2019-20, according to a new report published by the Institute for Energy Economics and Financial Analysis (IEEFA).

The largest deal in Indian renewable sector in the last financial year was the acquisition of SB Energy Holdings Ltd (SB Energy India), the clean energy unit of Softbank, Adani Green Energy Limited (AGEL) by in an all-cash deal worth $3.5 billion. SB Energy India had 5 GW renewable assets across four states in India through its SPVs.

Other key deals in sector included Reliance New Energy Solar’s acquisition of REC Solar holding assets and a host of companies like Vector Green, AGEL, ReNew Power, Indian Railway Finance Corporation and Azure Power raising money in the bonds market.

“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,” says the report’s author Vibhuti Garg, Energy Economist and Lead India, IEEFA.

“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.” she added

India added 15.5 gigawatts (GW) of renewable energy capacity in FY2021-22, which brings the total installed renewable capacity (excluding large hydro) to 110GW as of March 2022 – a long way off the target of 175GW of renewable energy capacity by the end of this year.

Even with the surge in investment, renewable capacity will have to expand at a much faster rate to reach the target of 450GW by 2030, the report added.

“The Indian renewable energy sector needs about US$30-US$40 billion annually to meet the 450GW target,” the report estimates “This would require a more than doubling of the current level of investment.”

Rapid growth in renewable energy capacity will be needed to meet India’s increasing electricity demand. To move to a sustainable pathway and reduce reliance on expensive fossil fuel imports, the report says the government needs to act as an enabler by rolling out ‘big bang’ policies and reforms to accelerate the deployment of renewable energy.

“This means not only increasing investment in wind and solar power capacity, but also in creating an entire ecosystem around renewable energy,” Garg added in the report.

“Investment is needed in flexible generation sources such as battery storage and pumped hydro; expansion of transmission and distribution networks; modernisation and digitalisation of the grid; domestic manufacturing of modules, cells, wafers and electrolysers; promoting electric vehicles; and promoting more decentralised renewable energy such as rooftop solar.” Garg said.