IEEFA: India will require $500-700 bn for renewable energy investment

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India will require $500 – 700 billion in renewable energy and supporting grid investment over the coming decade to meet its renewable energy targets, according to a new IEEFA briefing note released today.

“India is set to reach 144 gigawatts of renewable energy by the end of financial year 2021-22,” Tim Buckley, director of Energy Finance Studies with the Institute for Energy Economics and Financial Analysis (IEEFA), said.
The Central Electricity Authority is now targeting an ambitious renewable energy target of 523GW by 2030.

India added only 10.3GW of renewable generation capacity in FY2018-19. India has failed to capitalise on the momentum built over the previous two years through record low solar and wind tariffs.

The proposed tariff policy revision and the payment security mechanism enhancements are both significant regulatory reforms. “Removing the priority lending limit for the renewable energy sector will accelerate private bank lending to renewable energy infrastructure projects,” Kashish Shah of IEEFA.

Tendering activity accelerated in June 2019 with 13GW of renewable energy auctioned and tendered during the month. All of the tariffs were contracted for 25 years with zero indexation, while also being 20-30 percent less than NTPC’s average domestic coal-fired power tariffs.

As of June 2019, India had installed 82GW of renewable energy (including ~2GW of behind-the-meter rooftop solar capacity).

Of the 21GW of renewable capacity installed since the beginning of FY2017-18 and an additional 35GW awarded to date, more than 90 percent of it has been contracted for tariffs between Rs2.43- 2.80/kilowatt hour (kWh) with zero indexation for 25 years. This is 20-30 percent less than average domestic coal-sourced thermal tariffs from India’s largest energy conglomerate NTPC, of Rs3.38/kWh

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