If India wants to achieve net-zero emissions by 2070, it will need to change its energy mix toward renewable energy, which will be facilitated by supporting government policies, private sector engagement, and low-cost funding, according to Moody’s Investors Service in a research released on Monday.
According to the research, the government’s assistance in encouraging the private sector and foreign investors to engage in renewables would be critical to India meeting its objectives.
To reach its 2030 renewable ambitions, the government will need to spend around $225-250 billion.
India’s capacity to meet its renewable energy targets by 2030 will be decided by its ability to get low-cost, long-term, and varied financing from both the public and private sectors.
“The country aims to triple its renewable energy capacity to 500GW by 2030 from 157GW as of March 2022, and to have 50% of the electricity generation from non-fossil fuel sources. The key enabler will be the competitiveness of wind and solar generation over coal-fired power generation because of technological developments, supportive government policies, private sector participation,” says Abhishek Tyagi, a Moody’s Vice President and Senior Credit Officer.
The government’s continuous policy support is crucial — the country’s renewable energy footprint has increased considerably in the past 4-5 years as a consequence of favorable government policies that encouraged local and foreign companies to engage in the industry.
The poor financial condition of India’s state-owned distribution companies will remain a barrier to the country’s renewable energy industry. According to the research, payment delays are prevalent for these businesses, resulting in a buildup of receivables from off-takers and an increase in working capital debt for renewable energy firms.