Renewables, transmission to fuel power sector investment: Moody's

India needs $190-215 bn for 500 Gw renewable goal by 2030

Investment in the country’s power sector will be driven by renewable energy and power transmission over the coming years, according to a report by Moody’s Ratings on Thursday.

The agency said India’s target of 500 gigawatt (Gw) of renewable energy capacity by 2030 requires $190 billion to $215 billion of investment over the next seven years.

“We estimate that another $150 billion to $170 billion of investment will be required for electricity transmission and distribution and energy storage to cater to the incremental renewable energy capacity. The sizeable pipelines of announced projects will likely keep the financial leverage of rated renewable power companies high over the next two to three years, a credit negative, but the leverage of government-related issuers is likely to remain moderate over the same period,” Moody’s said.

While it emphasised the growth prospects of clean energy, the agency also said coal would continue to meet base load demand.

“Coal will remain an important source of electricity generation in the next eight to 10 years, which mitigates stranding risks for coal-based power assets. We expect India to add 40–50 Gw of coal-based capacity over the next five to six years to help meet power demand, which is likely to grow by 5–6 per cent annually over this period,” it said.

The rating agency said the utilisation factor of coal-based power plants will remain high at 65–70 per cent despite an increase in renewable energy capacity.

Since the onset of the summer season, power demand in India has been touching a new record.

Coal-based power is meeting the bulk of the demand with close to 70–75 per cent of supply, followed by gas, while renewable energy sources contribute 15-20 per cent to the electricity supply basket, this paper reported recently.
 

Global renewable investment hits $3 trn; India’s progress key: IEA

Investment in clean energy technologies and infrastructure is set to touch a new global high of $3 trillion in 2024, a report by the International Energy Agency (IEA) indicated.

“Investment in clean energy has accelerated since 2020, and spending on renewable power, grids, and storage is now higher than total spending on oil, gas, and coal,” the World Energy Investment report by the agency said.

The IEA in the report said that the gains are primarily coming from higher investments in renewable power, now representing half of all power sector investments.

The report noted a surge in Indian clean energy investment in recent years.

“Spending reached $68 billion in 2023, up by nearly 40 per cent from the 2016-2020 average. Almost half of this was devoted to low-emissions power generation, which includes solar photovoltaic. Fossil fuel investment grew by 6 per cent over the same period to reach $33 billion in 2023, in response to rising demand for fuel and coal-fired power generation,” the report observed.

Clean energy investment is on track to double by 2030 under today’s policy settings, but would need to rise by a further 20 per cent to get fully on track for the country’s energy and climate goals, it further said.