Global investors move to renewable sector

17 February, 2021 12:00 AM printer

NEW DELHI: Two reports on Tuesday looked into coal demand in India’s electricity mix and global financial flows moving to renewable energy industry.

A week earlier, International Energy Agency’s (IEA) India energy outlook said India would need a massive investment of $1.4 trillion if it were to aim for net zero by mid 2060, report agencies.

Much of this could come in from estimated savings due to reduced oil import bills. However, in addition to this, India could very well attract international investors.

The two new reports, one by IEEFA highlights various pull factors that make India’s renewable energy sector attractive for foreign direct investments and another by energy think tank Ember reveals India’s coal power has continued to decline since reaching a peak in 2018.

The Institute for Energy Economics and Financial Analysis (IEEFA) has looked at the number of new foreign direct investments coming into India’s renewable energy sector and highlights that close to $500 billion worth of investments would be needed if India were to reach 450 gigawatts (GW) of renewable energy by 2030.

Ember’s analysis says coal share in the electricity mix has been declining and if India sticks to its electricity policies as laid out in its five-year National Electricity Plan (2018) then coal will see a continued decline as more renewable energy capacity is added.

“Domestic and global institutions across the financial, corporate, energy, utility and government sectors are primed to deploy a wall of capital that India needs to fund its ambitious renewable energy targets,” says report co-author Tim Buckley, Director Energy Finance Studies, South Asia, at IEEFA.

While the renewable energy sector in India has received more than $42 billion in investment since 2014, the report highlights that it will require a further $500 billion in order to reach 450 gigawatts (GW) of capacity by 2030.

This includes the capital cost of adding more than 300GW of new renewables infrastructure, firming low-cost but intermittent renewable power generation, and expanding and modernising grid transmission and distribution.

Analysis by Ember says India’s coal-fired electricity generation fell five per cent in 2020 due to significantly reduced annual electricity demand as a result of the Covid-19 lockdown.

It is the second consecutive year that coal power has fallen, with coal generation down eight per cent in 2020 compared to 2018. However, coal still remains the dominant source of electricity, generating 71 per cent of India’s electricity in 2020.

The study analyses new data from the Central Electricity Authority, showing that coal fell by 51 TWh (five per cent) in 2020, caused by a 36 TWh (three per cent) fall in electricity demand and a 12 TWh (three per cent) rise in solar generation.

As coal-fired generation fell and coal capacity continued to rise, India’s coal plant load factor fell to a record low level of 53 per cent in 2020.