Investments in Renewable Energy (RE) projects during FY 2021-22

The global transition towards a low-carbon future has accelerated the growth of Renewable Energy (RE) projects, and India is no exception. With a target of increasing its RES capacity from 111GW to 436GW by FY30, the Indian Government has set ambitious goals for the RE sector. The total investment required to achieve this target would be INR16.3 trillion (US$212 billion), with a debt-equity ratio of 80:20, and the debt requirement would be INR13 trillion (US$169 billion) over a period of eight years.

Apart from this, the investment in transmission, Pumped Hydro Energy Storage (PHES), and battery storage is expected to be around INR3.7 trillion (US$48 billion), taking the sector’s overall debt requirement to ~INR16.7 trillion (US$217 billion). Over the next eight years, the RE sector would require ~INR3.5 trillion in equity capital (US$45.5 billion).

The overall loan book of India’s top five banks stands at INR59.3 trillion, as of 31 March 2022. This shows the huge quantum of debt financing opportunity provided by the RE sector over the next 8-9 years period, with a debt requirement of INR16.7 trillion (which accounts for 28% of the current loan book of top five banks).

Investment break-up:

• Solar: The investment required for solar projects is INR7.8 trillion for a capacity of 240,000 MW, with a cost of INR32.5 million per MW.
• Wind: The investment required for wind projects is INR5.5 trillion for a capacity of 100,000 MW, with a cost of INR55 million per MW.
• Transmission: The investment required for transmission is INR2.04 trillion for a capacity of 340,000 MW, with a cost of INR6 million per MW.
• Pumped Hydro Energy Storage (PHES): The investment required for PHES is INR500 billion for a capacity of 10,000 MW, with a cost of INR50 million per MW.
• Battery Storage: The investment required for battery storage is INR1.215 trillion for a capacity of 108,000 MWh, with a cost of INR11,250 per kWh (excluding Balance of System costs).

The RE sector is one of the fastest-growing sectors in India, with a vast potential for investment and growth. The government’s policies and incentives have attracted many private players to invest in the sector. The growth of the RE sector has also created employment opportunities and contributed to the country’s economic development.

In conclusion, the investment required for achieving the target of increasing the RES capacity from 111GW to 436GW by FY30 is significant. The government has set ambitious goals for the RE sector, and with the huge quantum of debt financing opportunities available, it is an attractive sector for investors. Private players can invest in various technologies such as solar, wind, transmission, PHES, and battery storage. Investing in the RE sector not only offers good returns but also helps in the global transition towards a low-carbon future.