India is extensively working towards increasing its share of renewable energy to honor its pledge under the Paris Agreement. It is now expected to reach the goal of a 40% share of renewables by 2027, three years ahead of time. This is only possible since India is emerging as a major market for renewable energy, especially solar and wind.
In Prime Minister Narendra Modi`s recent visit to France, he and his French counterpart Emmanuel Macron pledged promised to further reduce their carbon emissions beyond their nations’ goals. Currently, coal amounts for approximately 60% of India’s total electricity generation. According to the Indian Government, this share is supposed to gradually sink as renewables are on the rise. A major driving factor for this trend lies in the constant decline of especially solar power prices. Within 16 months, the cost of producing utility-scale solar electricity has shrunk tremendously, from INR 4.34 per kilowatt-hour in January 2016 to INR 2.44 in May 2017. The decreasing solar power prices also led the Indian Government to make a huge turning point in their energy plans. It was announced in May that 14GW of planned coal power projects have been cancelled, which shows that India is serious about transforming its energy sector.
Several companies have shown trust in the government’s path. Four Indian solar and wind power firms announced their plans to raise up to $2.5 billion in offshore bonds to finance further investments. Investors specifically seek for funds abroad as Indian banks seem reluctant for reasons, such as bad loans in the power sector or worries about falling tariffs for solar power. Nevertheless, the interest of foreign investors in the sector, also due to PM Modi’s commitment to massively increase its renewable power capacity, clearly shows that there are plenty of promising investment prospects, and foreign investors are attracted to acquire dollar bonds. Foreign investors in the Indian renewable energy market come from all backgrounds. These include, for example, private equity funds of banks and utilities in the private sector but also the public sector is represented with pension funds. The center of attention hereby lies in investing in solar energy generation capacities.
On May 24th, the Union Minister of State with Independent Charge for Power and Renewable Energy, Piyush Goyal launched a project on “Scaling Solar Mini Grids”. Mini grids refer to an energy distribution network of interconnected electricity generators and storages to supply local consumers directly with energy. The project aims to promote universal energy access by 2025. Through the introduction and promotion of mini grids for harnessing solar power in a time-bound manner, the project will achieve a reduction of electricity costs and tariffs.
Encouraging news came from India’s labor market in the renewable energy sector. The government’s efforts to expand the renewable energy capacities also transferred to a large spike in jobs. A study published in June states that more than 300,000 new workers can be employed in the field of wind and solar energy in the next five years. According to the study “Greening India’s Workforce: Gearing Up For Expansion of Solar and Wind Power in India” released by Delhi-based think tank, Council on Energy, Environment and Water (CEEW), and the Natural Resources Defense Council (NRDC), particularly the labor-intensive rooftop solar sector will employ as much as 70% of the new workforce, creating seven times more jobs than large-scale projects such as solar farms.
In the light of the country’s commitment to move to renewable energy as well as the invariably concern of rising oil prices, India is looking for alternatives to Organization of the Petroleum Exporting Countries’ (OPEC) oil. The considering is considering U.S. and Canadian suppliers. Currently, India imports 86% of its oil needs from OPEC states. In May, the country’s oil minister, Dharmendra Pradhan, explains that India would act in its national interest to secure inexpensive crude. To meet the Paris agreement, he further expressed the need to expand the use of natural gas as well as domestically process agricultural waste to produce biodiesel. Similar aims were observed during PM Modi’s visit to the U.S. in June, where President Trump is looking forward to sign a major new natural gas export agreement with India in the near future.
The country’s dedication for a transformation to renewable energy is commendable. Finland’s environment minister Kimmo Tiilikainen recently expressed that India has the potential to lead emerging economies when it comes to renewable energy and sustainable development. Reduction in the cost of equipment, finance and tariff provides a good potential for growth renewable energy sector. India has overtaken the US to become the 2nd most attractive country for renewable energy investments after China, according to the ‘Renewable Energy Country Attractiveness Index’ report by Ernst & Young. The government’s determination to become a green energy giant is attracting many foreign companies to invest in India and there is no doubt among industry experts that India will achieve its aim of renewable energy capacities.
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