ORF: Financing India’s Clean Energy Transition
SOURCE: https://www.orfonline.org/expert-speak/financing-indias-clean-energy-transition-73261/
Financing India’s Clean Energy Transition
Observer Research Foundation, Rupali Handa, 13 September 2020
(Image courtesy of Observer Research Foundation)
Clean Energy is directly (SDG7: affordable & clean energy, and SDG11: sustainable cities & communities) and indirectly (SDG3: good health & well-being, SDG13: climate action, SDG14: life below water, and SDG15: life in land) linked to various SDGs, yet the pace and quantum of investment in clean energy is not so much in line with these goals. Investment levels in clean energy remain far short of what would be required to put the world on a more sustainable pathway, highlighted the World Energy Investment Report 2020. In the International Energy Agency (IEA)’s Sustainable Development Scenario, for example, spending on renewable power would need to double by the late 2020s. Sadly, private finance faces various impediments while public finance is insufficient. Therefore, we need a mix to achieve the transition.
India’s energy sector is experiencing a transition with increasing penetration of renewable energy within the energy mix. The country has set ambitious renewable energy (RE) targets – 175 GW by 2022 and 450 GW by 2030. At a recent summit organized by the International Solar Alliance (ISA), Prime Minister Modi expressed his confidence about India surpassing its RE target for 2022, going beyond 175 GW to reach 220 GW capacity by 2022. However, achieving this requires capacity installation of 36GW annually, as per Institute for Energy Economics and Financial Analysis. This in turn requires further capital flow from both Indian and international investors. Even though India’s achievements in the last decade in accelerating renewable capacity addition have been remarkable, financing of clean energy in India continues to face multiple conundrums such as:
