Between 2022 and 2029, India would need investments worth $223 billion for the country to be able to meet its wind and solar capacity targets, a 3x increase over $75 billion actually invested between 2014 and 2021, says Bloomberg New Energy Finance (BloombergNEF).
Having secured $17.4 billion of asset financing in 2020 and 2021, new wind and solar power capacity is expected to require $27.9 billion annually during the forecast period.
The country is targeting to increase its total solar PV capacity to 280 GW and wind energy to 140 GW by 2030. Together, both solar and wind will represent about 420 GW of India's renewable energy capacity by the year 2029-30, out of 817 GW total power generation capacity estimated, according to the Central Electricity Authority (CEA).
Meeting the CER optimal energy mix by 2030 needs India to invest $363 billion in building new power projects and batteries between 2020 and 2029, says BloombergNEF in its latest report titled Financing India's 2030 Renewables Ambition, published with the Power Foundation of India. According to the report, from 2020 to 2029, a total of $241 billion would be needed to build solar and wind power plants and another $26 billion to build battery storage projects in the Asian nation.
The report counts India to have reached 165 GW of zero-carbon generation till the end of 2021. It says going forward from here will require India to scale up financing with new instruments, than just debt and equity structures that has supported the growth so far.
"Scaling up financing to meet 2030 goals requires Independent Power Producers (IPP) to tap into new or underutilized sources of capital. These could be revolving construction debt, investment infrastructure trusts and funding from retail investors, insurance companies and pension funds," explained BloombergNEF's India Research Team Analyst, Rohit Gadre. "Higher funding requirements also need measures that can increase the availability of financing, such as de-risking renewable projects to offering contractual terms that provide greater comfort to investors."
They claim corporate commitments alone can help India achieve 86% of its 2030 goal of 500 GW non-fossil fuel power generation capacity. Recently, WWF-India said following the virtual power purchase agreement (VPPA) model can help India create 104 GW renewable energy demand for commercial and industrial (C&I) consumers (see VPPA Model For India To Create 104 GW RE).
One of the recommendations in the report is learning from the experience of other markets so India can steer clear from those. For instance, BloombergNEF suggests India could learn from Saudi Arabia for land acquisition related challenges as it provides firm assurance of government land for renewables. Or Portugal that auctions land parcels with grid access.
Similarly, taking a leaf from the US market, providing government loan guarantee or post commissioning revenue certainty from the UK. Brazil, Peru, South Africa and the UK experiences should work well in terms of inflation-indexed tariffs.
Complete report is available for free download on BloombergNEF's website.