With the economic downturn in India, and around the world, perpetuated by the COVID 19 pandemic, renewable energy markets are facing a challenging time. Reclaiming and growing the momentum on clean energy expansion would need a lot of work. However, recent trends in India indicate there is hope for the long-term.
First, India has achieved 50% of its 2022 renewable energy target of 175 GW as of March 2020. This is a big milestone and a long way from where India was just five years ago. And yet, there is a long way to go. With imminent economic slowdown, the 450 GW of renewable energy target announced by PM Modi last year would require strategic policy support and innovative financial solutions.
Second, India has achieved 38% fossil-free installed power capacity, as of March 2020, against its NDC target of 40% by 2030. In fact, solar and wind already comprise almost a quarter of India’s installed capacity. India is clearly way ahead on meeting this key target which should give hope and inspiration to other nations in the fight against climate change.
Third, despite the lock-down in the country in March, 8 GW of new solar tender were announced including a whopping 5 GW by the Solar Energy Corporation of India (SECI). This is good news coming after a relatively slow 2019 when solar capacity addition declined by over 30% compared to 2018.
Fourth, finance remains a key bottleneck for the growth of the market as for the second successive year India’s clean energy investment numbers have seen a decline of over 15% from the 2017 peak ($13.8 billion). Total investment was about the same in 2019 ($11.4 billion) as in 2018 ($11.7 billion) as per BNEF. Lower interest rates could help lower the cost of capital for new projects. However, with distressed discoms, and expected payment delays, catalytic finance solutions such as risk mitigation and credit enhancement could be critical.
Fifth, electric vehicle (EV) financing is emerging as an attractive asset class for financiers with big opportunity to invest in charging infrastructure. Of the one million (EV) public charging points installed around the world, less than 0.1%, about 700, are in India.
It is too early to predict the full impact of this pandemic on clean energy expansion in India. However, given the country’s focus on employment generation, air quality, energy security, and resilience to climate and health disasters, we hope that clean energy remains a clear strategic priority as India, and the rest of the world, emerge from this difficult time and look to rebuild their economies.
In the face of the global COVID-19 pandemic, our thoughts are with our colleagues and people around the world. While we are working from home at this time, our mission and work continue.