Key Points of S&P Global Ratings Report:
- India needs $540 billion of investment between 2020 and 2029 to meet its renewable energy targets.
- India aims to achieve net-zero emissions by 2070 and has set a target of 500 GW of non-fossil electricity capacity, with half of the energy to be generated from renewables.
- To achieve its renewables target, India needs more than 40 GW of new capacity additions annually.
- Private sector investments are expected to lead India’s energy transition.
- Renewables capacity in India is growing faster than coal, but demand growth and intermittency issues have led to greater coal usage and new coal plants.
- India is shifting from fossil-based systems of energy production and consumption to renewable energy sources like wind and solar, as well as lithium-ion batteries.
- Renewables face increasing intermittency issues, necessitating grid flexibility and energy storage solutions.
- India is progressing towards the next stage of renewables, referred to as ‘Renewables 3.0,’ with diversification into hybrid, pumped storage, and round-the-clock projects.
Details of S&P Global Ratings Report:
S&P Global Ratings has stated that India requires $540 billion of investment between 2020 and 2029 to fulfill its targets for electricity generation from renewable sources. The country aims to achieve net-zero emissions by 2070 and has set a target of 500 gigawatts (GW) of non-fossil electricity capacity, with half of the energy to be generated from renewables, a reduction of emissions by one billion tonne, and an emissions intensity of the GDP by 45% by 2030.
S&P Global Ratings’ report titled ‘Asia-Pacific’s Different Pathways To Energy Transition’ highlights that India needs more than 40 GW of new capacity additions annually to achieve its renewables target of 500 GW by 2030. Although renewables capacity in India is growing faster than coal, demand growth and intermittency issues have led to greater coal usage and new coal plants.
S&P Global Ratings has said that private sector investments will lead India’s energy transition, as policies create an enabling environment. The report reveals that investments of $540 billion are required between 2020 and 2029 to meet India’s renewables target, with half of these investments being in renewables and batteries, and another third in strengthening the grid. Private sector utilities are expected to lead generation capex, while public sector utilities will likely lead grid investments, and domestic long-term bank funding is available against projects and cash flows.
India is the world’s fourth-biggest emitter of carbon dioxide, after China, the US, and the EU. However, its emissions per capita are much lower than other major world economies. To achieve net-zero, the country is shifting from fossil-based systems of energy production and consumption, including oil, natural gas, and coal, to renewable energy sources like wind and solar, as well as lithium-ion batteries.
S&P has also warned that renewables face increasing intermittency issues, necessitating grid flexibility and energy storage solutions. The report states that as much as 12.1 GW of energy storage is likely to be added by 2030, against a target of 27 GW of battery and 10 GW of pumped storage, with a 20% tariff on Chinese batteries and subsidies for domestic production aiming to develop the ecosystem.
S&P Global Ratings credit analyst Abhishek Dangra has stated that India is progressing towards the next stage of renewables, referred to as ‘Renewables 3.0,’ with diversification into hybrid, pumped storage, and round-the-clock projects, moving away from feed-in-tariff and highly competitive bidding. However, execution risks and return profiles can significantly diverge.
The report concludes that the countries of Asia-Pacific still have a long way to go before they can meet their ambitious energy targets. While policies are still evolving, some key countries, such as China and India, have no specific timeline to phase out coal. Access and affordability will trump long-term energy-transition goals, while energy security considerations may delay the transition for some.
About S&P:
S&P Global, a publicly traded American corporation, is headquartered in Manhattan, New York City, and specializes in financial information and analytics as its primary business domains.
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