Green Investing - Pathway to India's transition towards Net Zero
At COP 26 of the UNFCCC (United Nations Framework Convention on Climate Change) at Glasgow, Prime Minister Narendra Modi set forth 5 nectar elements or Panchamrit towards sustainable energy in India: one, to reach a non-fossil energy capacity of 500 GW by 2030; two, to meet 50% of our energy requirements from renewable energy by 2030; three, to reduce carbon emissions by 1 billion tonnes by 2030; four, to reduce the economy’s carbon intensity by 45% by 2030; and five, to achieve the target of Net-Zero by 2070.
Governments and investors across the world have been shifting focus towards green and sustainable investments to achieve the targets set as a part of the Paris Agreement. The Government of India, especially, has accelerated efforts to shift to green energy and has introduced various incentives and schemes.
Currently, India’s installed non-fossil energy capacity is the 4th largest in the world. The Union Budget 2022-23 was a testament to the Government’s commitment to achieving a sustainable future for the country. Major budgetary provisions for commitment to green industrialization, such as the sovereign green bonds and additional allocation for solar PLI (Production Linked Incentive) scheme are steps towards making India an attractive destination for green investments.
Investment in the renewable energy sector in India increased more than 125% year on year and reached a record USD 14.5 billion in the financial year 2021-22 (FY22). The Government of India has actively supported the adoption of renewable energy. 100% FDI (Foreign Direct Investment) is allowed in the sector under the automatic route.
Further, the Government is working towards laying new transmission lines and creating new sub-station capacity under the Green Energy Corridor Scheme. Mega Renewable Energy Parks are being developed to provide land and transmission to Renewable energy developers on a plug-and-play basis. Recently, India's largest 100-MW floating solar power project became functional in Telangana.
Some of the major ongoing schemes in the sector include Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM KUSUM), an initiative to provide clean energy to more than 3.5 million farmers by solarising their agriculture pumps.
Roof Top Solar (RTS) Programme, launched in December 2015 in which incentives and subsidies are provided for residential, institutional and social sectors.
Green Energy Corridors, launched in 2015 for setting up of transmission and evacuation infrastructure. The Intra-State transmission system has been sanctioned to eight renewable energy-rich states of Tamil Nadu, Rajasthan, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Himachal Pradesh and Madhya Pradesh for evacuation of over 20,000 MW of renewable power.
Over the past five years, with continuous support by the Government, especially with platforms like India Investment Grid (IIG), which have brough investible projects at the fingertips of investors, India’s growth in renewable energy has doubled. India also has one of the world’s lowest solar tariffs at Rs 2.14 kW/h. It is in line with India's target of achieving 450 GW renewable energy installed capacity by 2030.
Another stride towards green energy is the National Hydrogen Mission. It aims to make India a global hub for green hydrogen production, investment and export. As per a recent report by NITI Aayog, the government can use public procurement and purchase incentives for green hydrogen to create demand in niche markets and attract private investment, while promoting the export of green hydrogen and green hydrogen-embedded products through a global hydrogen alliance.
India’s solar energy and green hydrogen sector is a huge potential investment opportunity. In addition to the continuous support provided by the Government to these sectors, India’s energy demands are rapidly increasing. The emergence of electric vehicles will also boost the energy demands, and green investments will lead the path to India achieving its sustainability targets.
