Finance, transmission, storage key to renewable future: Experts at BS Infra

Business Standard Infrastructure Summit: Renewable energy leaders flag high cost of capital, Discoms, and storage bottlenecks as potential hurdles to growth

At the Business Standard Infrastructure Summit on Thursday, industry leaders and policy experts stated that while India’s renewable energy sector has achieved remarkable growth, its future expansion depends on addressing critical challenges in financing, transmission, and storage.

 

India come long way in RE, but cost of capital remains high

Vaishali Nigam Sinha, co-founder of ReNew, said India had created “a very enabling environment” for renewable growth, with policies that evolved in tandem with sectoral needs. “We started at a time when renewables did not exist. What has happened since—and what’s really good—is that our policy evolution, whether for wind, solar or green hydrogen, has kept pace with the issues businesses faced as they entered the sector,” Sinha stated.

 

 

However, Sinha cautioned that the weak financial health of distribution companies (Discoms) continues to weigh on investor confidence.

 

“If we get that in order, there will be a lot more investor reliance and trust in the sector,” she said. Land acquisition and the high cost of capital also remain hurdles. “The cost of capital in India has been on the higher side, which has been a deterrent for global institutions to bet more on the sector,” she said.

 

Storage and transmission were cited as emerging bottlenecks. “Our renewable capacity is growing faster than the transmission development,” Sinha said, adding that government policy would need to bring both “in tandem”. 

 

Financing and infra gaps could slow momentum of renewables growth

From the global perspective, Gauri Singh, deputy director general of the International Renewable Energy Agency (IRENA), warned that India’s financing and infrastructure gaps could slow momentum.

 

“There was a global commitment to triple renewable energy—11,000 GW by 2030. We are at 500 GW right now. Unless large countries like India put their weight behind such commitments, this is thin air,” she said.

 

Singh argued that while India had laid a “solid foundation” with investments and policy direction, transmission and storage must expand simultaneously with capacity additions. “If storage solutions at affordable costs are not forthcoming, it will really stymie the kind of push we are seeing from developers,” she said.

 

Bankability and project executions

Prashant Choubey, president of Avaada Group, spoke on how far India's ambitions in the renewable energy sector have come.

 

“In 2014, when PM Modi spoke about 100 gigawatt renewable capacity, everyone was shocked. In 2011, Germany did 10 GW, and the world was amazed. Last year, we did 25 GW in a single year,” he said.

 

Choubey argued that capital was not the binding constraint, but bankability and project execution were. “One important challenge most developers face is in converting LOIs into PPAs. Almost 35–40 GW of LOIs need to be converted, and that’s where a significant issue comes up,” he said.

 

Choubey echoed concerns about transmission and storage. “Such a humongous integration of renewable energy into the system will create an issue. That’s why the government has put emphasis on storage,” Choubey said, adding that India would need “humongous” storage capacity beyond the current 4.8 GW. 

 

Despite the concerns, speakers agreed that India’s progress had been substantial.

 

“Renewables being at 50 per cent capacity just shows you that we are moving in the right direction, and there is a clear road with markers to make sure we keep on track,” Singh said.