Raised climate concerns combined with economic opportunity are driving renewables to new records.
The global capacity for renewable electricity is expected to increase by over 60% from its 2020 levels, reaching a total of more than 4,800 GW by 2026. This would be equivalent to the current combined global power capacity of fossil fuels and nuclear energy1.
Amongst the multiple countries trying to capitalize on this opportunity, India is leading the charge and making significant strides in the renewable energy sector. Favorable policies, abundant renewable resources, growing demand for electricity, and a strong private sector have helped India’s renewable energy industry outpace many other emerging economies. According to the REN21 Renewables 2022 Global Status Report, the country ranked third in the Renewable Energy Country Attractiveness Index in 2021.
With a rapidly growing economy, India is one of the world’s largest energy consumers, and its shift towards renewable sources of energy has the potential to significantly impact global efforts to mitigate climate change. Below is a list of statistics that demonstrate the leadership of India’s renewable energy industry2:
India’s renewable energy industry is expected to continue its growth trajectory in the coming years, driven by several key factors, namely3:
The government of India has allowed up to 100% off FDI in the renewable energy industry for investments made in renewable energy generation and distribution projects. The incoming FDI also doesn’t require any prior government approval and can be invested under the automatic route. In 2023, it is expected that India would attract around $13 billions of FDI. The government has planned to construct at least one solar city per -state. The construction of around 45 solar parks, across the nation, totaling 37 GW, has already been approved and is in progress. Additionally, policies and initiatives such as the National Solar Mission and National Wind Mission have also been implemented by the government to support this goal.
Focus on New Areas of Renewable Industry
India is diversifying its renewable energy production by exploring alternative methods beyond the conventional forms. These include wind-solar hybrid, floating PV projects, and green hydrogen production. India aims to produce approximately 5 million tons of green hydrogen by 2030, which will contribute to an 8 GW renewable energy capacity. The green hydrogen market is projected to grow to $8 billion by 2030, which will necessitate an increase in electrolyzer manufacturing.
The Production Linked Incentive (PLI) program, which is a component of the Atmanirbhar Bharat 3.0 initiative, was launched to support the growth of solar-based renewable energy production. This initiative has a total financial outlay of $2.9 billion (equivalent to INR 24,000 crores) and focuses on Solar PV manufacturing. Since April 2022, the imposition of a 25% basic customs duty on Solar cells and a 40% basic customs duty on Solar PV modules has significantly reduced the import of PV cells from China, thereby encouraging domestic players to expand their market share and presence.
India’s renewable energy industry has made remarkable progress due to its ambitious targets, government policies, and favorable market conditions. With the cost of renewable energy decreasing and public support increasing, India’s achievements in the clean energy sector, including its high rankings in the Renewable Energy Country Attractiveness Index, are a testament to its commitment to sustainable development. These factors have created a favorable environment for companies to invest in the sector, which offers significant market potential and growth opportunities. As a result, the Indian clean energy industry is likely to continue to attract investments from both domestic and international players in the coming years, leading to a significant expansion of the sector and the transition to a cleaner and more sustainable energy system in India.
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