To catch the rays of investments

How can India attract investment to shore up its renewable resources and alternative energy sector, and meet its target of 175 GW by 2022?

Some cues are provided in the Sustainable Development Goals (SDG) Investor Map Report for India, 2020, released last week by UNDP India and Invest India. It identifies stumbling blocks to bringing in domestic and foreign investments of $100 billion, estimated by the government as required to bolster the renewable sector, which has seen a dip in investor interest for various reasons including the post-Covid-19 financial crisis.

Consultations with industry experts threw up a host of issues impeding investment.

Private players found land acquisition a difficult proposition, as also auction cancellations and renegotiated power contracts.

Apart from revised qualification requirements, they wanted a cap on the lowest quote and a fillip for newer and more efficient technologies. They also raised the issue of low, unfeasible tariffs.

Next, the components used in manufacturing renewable energy-based products are imported at a high cost.

There is dependence on Chile, Argentina, Bolivia, China, Congo and the US for core components of lithium-ion batteries. It will be a few years before India can reach the economies of scale to make these components.

Another downside is the difficulty in integrating renewable energy into the Indian grid structure as there is no system to facilitate efficient electricity trading between states with surplus renewable generation. Establishing smart grids could help in this and in catering for storage.

In addition, investors were wary of the mounting dues from distributors: Data from the Central Electricity Authority shows that in 2019, discoms owed $1.29 billion (around ₹9,500 crore) to renewable power producers.

At present, the country’s installed renewable energy capacity is 87.26 GW, which includes 34.81 GW of solar, 37.74 GW of wind, 9.86 GW of biomass and 4.68 GW of small hydro.

“Key investment deals in renewable energy sector [in 2020] amounted to $8.4 billion (₹61,000 crore), of which 41 per cent was in solar, 10 per cent in wind, while 1 per cent was for storage or solar,” Karanraj Chaudri, Advisor, India/ South Asia, Social Impact Investments, UNDP, told BusinessLine. The report identifies roof-top solar, floating solar, hybrid projects and electric vehicle-related technology as best opportunities for investors.

The SDG report has explored prospects for investors in other sectors as well. These include education, healthcare, food and financial services. The aim is to ensure India keeps pace with its SDG commitments as it is found to be one of the countries most vulnerable to climate change.