Co-authored with Madhura Joshi and Poonam Sandhu
As the world nears five years of the historic Paris Climate Agreement, India has called for greater global investment in the country’s clean energy future. Prime Minister Modi, speaking at the 3rd Global Re-Invest, India’s marquee renewable energy conference, made a strong case pitching the country as an attractive renewable energy investment destination.
India, the world’s fourth largest renewable energy market, needs to significantly scale up investment if it has to meet its goals of increasing renewable energy capacity fivefold to reach 450 gigawatts by 2030. In addition to fighting the climate crisis, renewable energy can help India create a million job opportunities up to 2022, power rural livelihoods, and boost economic recovery.
Need for Increased Clean Energy Investment in India
As one of the fastest growing renewable energy markets worldwide, India needs clean energy investment of at least $20-$30 billion annually, much higher than the average investment over the last five years of $8 to $10 billion per year. PM Modi highlighted the growing demand—over 36 GW in the next three years—for domestic manufacturing of solar PV.
India’s call for increased investment underscores the need for private domestic and international funding, as public funding alone is not enough to meet India’s climate goals. Although the total foreign direct investment in the country has been steadily increasing over the years, clean energy and low-carbon infrastructure forms a very small part of the capital influx. Even domestic private and institutional investors have so far been peripheral clean energy investors in part due to higher perceived risk and smaller ticket size of clean energy projects. To grow the scale of investments, the market needs a variety of financial products for mitigating risks and creating a robust climate financing ecosystem.
Domestic institutions like the Indian Renewable Energy Development Agency (IREDA) have an important role in raising capital and deploying funds effectively. Innovative financial structures such as a dedicated Green Window, that utilize public funds to leverage private capital, can make a difference. The Ministry of New and Renewable Energy (MNRE) had announced plans to set up the IREDA Green Window in December 2019, and as India seeks greater green investment it is time to capitalize the Green Window and operationalize it. At the RE-Invest session on green finance, Mr. P. K. Das, IREDA Chairman, reiterated IREDA’s commitment to lead as a renewable energy pioneer. NRDC and our partner the Council on Clean Energy Environment and Water are working with IREDA on operationalizing the Green Window.
Global Partnership to Fight Climate Change
As the third largest single-country emitter of greenhouse gases, India’s climate and clean energy trajectory has significant global impacts, and the global community is increasingly recognizing this. At RE-Invest, leaders from several countries reaffirmed their support to accelerate clean energy growth and fight climate change in partnership with India.
The United Kingdom, host of the next climate change conference in Glasgow, is a key Indian partner on clean energy. Mr. Alok Sharma, Secretary of State for Energy, the United Kingdom, highlighted how investments in renewable energy have repeatedly outperformed fossil investments. The UK plans to quadruple its offshore wind capacity by 2030. He added, “we must work five times faster to save the planet in the next ten years.” The UK is hosting the Climate Ambition Summit on December 12 and has invited India to reaffirm its commitment to stronger action on climate change.
At RE-Invest, leaders from Denmark, Netherlands, and Israel also called for the global community to come together for responding to the climate crisis. Minister of Climate and Energy, Denmark, Mr. Dan Jorgensen said that we can save the planet with smart decisions. Prime Minister of Netherlands, Mr. Mark Rutte urged the world to build back better and fast track investments in renewable energy. Prime Minister Netanyahu from Israel said his country will be cutting back on its coal consumption and aims that renewable energy will contribute to 30% of its electricity capacity by 2030.
Major Asian economies China, Japan, and South Korea have announced carbon neutrality goals of their own this year, and each of them have significant clean energy investments in the India. In the United States, the incoming Biden-Harris Administration has committed to rejoining the Paris Agreement and has indicated climate change as a priority for Indo-US strategic partnership.
Indian Minister for Power, RK Singh said that India aims to achieve its climate transition goals in cooperation and in partnership with all countries.
Clean energy is the fuel of the future, and at RE-Invest the Indian Prime Minister reiterated his high goals for meeting India’s growing energy needs while phasing down fossil fuels. To translate these goals into reality, the country needs to further strengthen the clean energy finance ecosystem to attract private investment both locally and from international investors.
Madhura Joshi is an energy access and climate policy expert with NRDC's India Program as a consultant based in New Delhi.
Poonam Sandhu is a clean energy finance expert with NRDC's India Program as a consultant based in New Delhi.