India has huge supply-demand imbalance in the energy sector and the demand of energy are rising rapidly across the country due to economic growth, rising urbanisation and rise in per capita consumption. To meet the energy requirement, government has been working on renewable energy and inviting foreign investment to meet its target of 175 GW by 2022.
Due to shortage of power supply in the country, huge quantities of diesel and furnace oil have been used by various sectors like commercial, industrial, residential and institutional, even today over 40 percent of the country’s population is denied energy access.
To become energy independent, the government of India has been working to meet the rising demand of energy, especially the renewable energy. Ministry of New and Renewable Energy has set the target of 175 GW renewable energy capacities by the end of 2022 to supply electricity to every household in the country. This includes 100 GW from solar, 60 GW from wind power, 10 GW from biomass power and 5 GW from small hydro power.
As of November 2015, the total installed capacity of renewable energy was 37.4 GW, which is 8 percent of total energy consumption of the country.
The government has eyed an investment of USD 200 billion in renewable energy to clean climate.
In the first quarter of 2016 (January-March), investment in clean energy has jumped 6 percent to USD 1.9 billion as compared to during the same quarter last year, as per the report of Bloomberg New Energy Finance. However, global clean energy investment in the same quarter has declined by 22 percent to 53.1 billion as compared to the previous quarter of Q4 2015.
Various international and domestic companies have committed to invest USD 310-350 billion over the next 5 to 10 years in wind, solar, biomass, mini-hydel based power in India. The sector has attracted USD 9.97 billion foreign direct investment (FDI) between April 2000 and September 2015.
Recently Denmark based LM Wind Power has invested around Rs 200 crore (25 million euros) in its Gujarat facility.
India Ratings & Research (Ind-Ra) finds renewable energy sector stable in its ‘FY17 Credit Outlook’ report.
“The outlook for existing renewable projects remains Stable based on the fixed-price, long-term revenue contracts that typically underpin cash flows. Capital costs for solar technology continue to fall and improve competitiveness, despite diminishing tax advantages and rupee depreciation,” said the report.
Ind-Ra has maintained a stable outlook on the wind power sector for FY17, given the continued impetus and stable policy regime for the sector. Government’s recent announcements for the sectors such as no transmission charges, and applicability of generation-based incentive (GBI) for FY17 bode well for the sector.
The report has also maintained a stable outlook for solar energy sector for FY2016-17. Ongoing emphasis and policy actions towards the achievement of 100GW target by FY22 could drive capacity additions in the coming year.
Government has permitted foreign direct investment (FDI) up to 100 percent under the automatic route for renewable energy generation and distribution projects to bring foreign investment in the sector. Government has taken various other initiatives to promote the sector and meet its target of 175 GW by 2022.
Prices for solar modules have declined almost 80 percent and turbine prices have declined 25 percent since 2008 which will promote further investment in the sector.
Government expect country’s annual solar installations to grow forth-fold by 2017, it expects 10.86 GW of utility-scale solar and grid connected rooftop solar capacity will be added in 2016-17.
The sector will require huge amount of various types of heavy construction equipment to install renewable energy projects in the country.
Source: Information has been obtained from MNRE, Bloomberg New Energy Finance, IBEF, Makeinindia.com, and PTI.