The 2020 decline in investment in India’s renewables programme resulting from the impact of the Covid pandemic has been arrested, according to a briefing note published by the Institute for Energy Economics and Financial Analysis. Investments in RE are rising – IEEFA states that RE investors committed $6.6 billion in the first four months of 2021, up from $6.4 billion invested in the same period in 2020. IEEFA forecasts that if the trend continues, 2021 investments will surpass last year’s $8.4 billion.

IEEFA believes that the upsurge is caused by rebounding energy demand and a wave of commitments from banks and financial institutions to exit fossil fuel financing.

Saurabh Trivedi, co-author of the briefing note and a research analyst at IEEFA, added: “Green bonds have become a key financial instrument for mobilising cost-effective foreign debt capital into the Indian renewables market. Since 2016 Indian corporates and financial institutions have raised around $14.43bn through green bonds as per Bloomberg New Energy Finance (BNEF) data. In 2021 to-date, Indian companies have attracted $4bn in green bonds, already beating the previous record of $3.43bn in cumulative green bond issuance in 2017.” Other factors driving the increase in renewables investments in India include the government’s announcement that it plans to redouble its efforts in renewable energy to secure energy supply and self-reliance. 

Corporates in India have also shifted their focus to clean energy to decarbonise their operations. The lending portfolios of Indian financial institutions like State Bank of India (SBI) and Power Finance Corporation (PFC) now include more renewable energy assets than fossil fuels, a trend which has picked up significantly in the last one to two years, according to the briefing note.

However, there is a warning that despite the positive developments within the Indian sector, investments being made are well short of what is required for the country to meet carbon emissions reductions targets. 

The country is estimated to require an additional $500 billion in investment in new wind and solar infrastructure, energy storage and grid expansion and modernisation to reach 450GW of capacity by 2030. 

Today, India is investing between $18 billion and $20 billion in energy generation capacity and a further $20 billion in the grid per annum. The International Energy Council recommends India triple its annual investment in renewable energy to achieve sustainable development goals.