India’s prospects of achieving its nationally determined contribution (NDC) target of installing 450 GW of renewable capacity by 2030 looks favourable with global investors ready to invest hundreds of billions of dollars in the country’s decarbonisation industry.
For India to meet its renewable energy goal by 2030, it will need US$500 billion of investment over the next decade. The roadmap towards this is looking increasingly plausible, with India now the centre of attention for a number of global energy giants looking to diversify their renewable energy portfolio, according to analysis from the Institute for Energy Economics and Financial Analysis (IEEFA). The decreasing cost of debt and a decline in wholesale electricity tariffs from solar and wind generation sources offer long-term opportunities. Perhaps more important than all of this for investors is the country’s untapped renewable potential of 900GW is equal to any other country in the world.
An economic approach from Indian states
News from the IEEFA report details the contribution of investors like the Swedish-headquartered EQT and Singaporean-headquartered Temasek amongst others, and lists who established contracts in India’s various regions and for what costs.
To make such agreements a key part of India’s path towards its 2030 NDC target, the country must ensure its states avoid a ‘penny wise, pound foolish’ approach which could upend the progression already made. Alongside this, the report quotes one of the IEEFA report’s authors, Tim Buckley, as saying that while companies are eyeing up India’s untapped renewable potential worth $500 billion, but that they will invest if the risk-return metrics make sense. This will only happen if “India can stick to transparency, longevity, and certainty of the policy environment,” as Buckley puts it.
As Health Issues India previously wrote on India’s environmental efforts, “in fighting climate change and stepping up environmentalism efforts, India has much to gain. To forego this, India has much to lose.” Part of such efforts is rethinking the country’s energy infrastructure. Investment will be key to rethinking energy infrastructure within the country, and avoiding the detrimental cost of fossil fuels which costs India US$2.9 trillion a year, alongside a concerning manifold health effects that contribute to premature deaths and illness.
India’s roadmap for renewables
Nonetheless, insight from the IEEFA builds on an increasingly positive landscape for India’s climate goals which has seen India sit alongside mainland China as one of the biggest emerging markets for clean energy investment in 2019 and, more recently, the country’s renewable energy capacity has been increasing and delivering heightened energy capacity.
“Capacity building [in India] in the last 12 months has been nothing short of phenomenal,” Buckley said. “The cost to consumers [for new renewable infrastructure] will be a fraction of what it was going to be even a year ago. So why would you not do it?”
Behind this incredible drive for a transition to renewable energy is India’s improved pledge as part of its commitment to the Paris Agreement at the COP21 talks. Early success with initial NDCs has seen the Government of India move its goalposts and expand its target for renewable capacity to 450GW by 2030, a target that requires capacity installation of 36 GW annually, and fundamental capital flow from both Indian and international investors.
Dr Jonathan Foley, writing for GlobalEcoGuy.org, breaks down climate action into four phases. Renewable energy falls under ‘new infrastructure’ as we replace old infrastructure with new, low-emitting systems. He writes “we have to shut down fossil fuel energy sources and deploy renewable energy across the planet as quickly as possible. But given the enormous physical infrastructure and capital involved, this will inevitably take time.”
India appears to be acting quickly, and despite meeting headwinds with economic slowdown in 2019 followed by the COVID-19 disruptions of 2020, the country is making strong progress in its transition towards increased renewable energy capacity by 2030 as its capacity continues to expand across the financial, corporate, energy, utility, and government sectors with increased investment. Ultimately, for the NDC to be a success, there is a need for a sensible, transparent economic approach, a prospect set to unfold over the coming months and years.