India could attract $500-700 billion new investment in renewable by 2030

Policy certainty will increase domestic and international investing into India, finds a new report out by the Institute for Energy Economics and Financial Analysis (IEEFA). “India is one of the world’s largest and fastest growing markets for renewable energy and power transmission,” says report author and IEEFA’s Director of Energy Finance Studies Tim Buckley.

“Domestic renewable energy tariffs are now two thirds the cost of domestic coal-sourced power tariffs and half that of new imported thermal power costs. India must be very proud of this result, and they must leverage this opportunity to enhance energy security whilst securing deflationary domestic energy investments. The opportunity cost of delaying India’s electricity sector transition is too high. With a few policy tweaks, India could be back on track to meet its ambitious target of 450 GW of renewable by 2030.”

The IEEFA report identifies a number of policies currently stifling growths in renewable energy in India. They include the imposition of the solar cell and module trade duty in 2017, which the government is now looking to extend beyond 2020. The duty has neither reduced imports nor significantly improved the competitiveness of Indian manufactured solar cells. Instead, it has severely slowed down solar installs in India, both because of the extra cost imposed but equally due to the confusion on delayed implementation.

“The uncertainty of this trade duty has been one of the most serious impediments to India’s renewable energy momentum,” says co-author Kashish Shah, IEEFA’s energy finance analyst. Better centre-state coordination on renewable energy development and increasing the expansion of necessary transmission networks and balancing capacity (batteries, pumped hydro storage, demand response management and more flexible thermal capacity) are further policy areas requiring immediate attention. The report concludes that sovereign risk, policy risks and erratic DISCOM payments are all creating unnecessary financial constraints for the Indian renewable energy sector.