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Indian Power Industry Investment

by | Sep 16, 2022 | Green Investments

Introduction

Indian power industry investment is the most critical component of the infrastructure. It is vital for the economic growth and welfare of nations. The Indian economy needs the development of adequate power infrastructure to sustain its growth.

India has some of the world’s most diverse power sectors. India’s sources of power range from conventional sources such as oil, natural gas, coal, hydroelectric, and nuclear to renewable sources such as solar, wind, biomass, and biofuels.

Due to an increasing population, electricity demand in the country has increased rapidly. Industry experts expect the electricity demand to rise in the coming years further. To meet the high electricity demand of the country, we need massive additions to existing electricity generating capacities. With the climate crisis looming on the horizon, the government must meet these additions by increasing the generation of energy and electricity from renewable sources.

Indian Power Industry Investment

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Our country is one of the world’s biggest emitters of greenhouse gases. With a growing population and increasing energy demand, we need to source our power from green and renewable sources. If a country like India, with such a large population, can accelerate the shift to clean energy, it could significantly slow down climate change. Moreover, it would motivate other countries to do the same.

In 2020, India ranked fourth in wind power generation, fifth in solar energy generation, and fourth in the world in terms of its renewable energy capacity.

Market Size

The Indian power industry investment is currently witnessing a significant change. It will soon redefine the entire industry outlook. A sustained economic growth continues to drive the demand for electricity in India. The Indian government has recently focused on achieving ‘Power for all’. This has accelerated the additions to current electricity capacities in the country.

India is the second-largest consumer and third-largest producer of electricity. As of January 2022, our country had an installed power capacity of 356 GW. Thermal sources contributed 66%, renewables 22%, hydroelectricity 13%, and nuclear 2% to the total energy generation capacity in India. Apart from this, around 293 global and domestic countries have committed to generating 266 GW of wind, solar, and biomass energy in India over the next 5-10 years.

Indian Power Industry Investment

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As of January 2022, India’s renewable energy capacity stood at 152.36 GW. The coal-based power capacity stood at 203.9 GW in the same year. Experts expect the coal-based power capacity to increase to 330-441 GW by 2040.

2021 witnessed the peak power demand in the country, standing at 203.01 GW.

Power Industry Investments in India

Indian power industry investments recorded significant growth. Some of the investments are:

In March 2022, the National Thermal Power Corporation (NTPC) announced plans to develop a 92 MW floating solar energy plant at Kayamkulam in Kerala.

The same month, NTPC announced the commencement of commercial operations of solar energy of a 296 MW capacity at Fatehgarh in Rajasthan.

Smart Power India (SPI), a subsidiary of Rockefeller Foundation, and Adani Solar signed a non-commercial and non-financial MoU to help promote solar rooftop panels in rural India.

The Satluj Jal Vidyut Nigam (SJVN), an Indian public sector engaged in hydroelectric power generation and transmission, has invited investments of 50,000 crores over the next five years to develop a 10,000 MW solar power project in Rajasthan.

In November 2021, NTPC announced that commercial operations would start at its 80 MW solar power facility in Jetstar, Rajasthan.

In October 2021, the Indian government awarded the NTPC a contract to construct a 325 MW solar power project in the Indian state of Madhya Pradesh.

In November 2021, SJVN began working on the second unit of a 1,320 MW thermal power plant in Bihar.

In September 2021, the Bank of India signed a green term loan agreement with NTPC Renewable Energy, a 100% subsidiary of NTPC. The loan is worth 500 crores. NTPC loaned the amount to construct 470 MW solar power projects in Rajasthan and 200 MW solar power projects in Gujarat.

In September 2021, the Adani Group announced that it would invest 20 billion dollars in renewable energy generation and component manufacturing over the next ten years.

In July 2021, NTPC Renewable and a domestic tender commenced work on building India’s first green hydrogen fuelling station at Leh, Ladakh. NTPC also announced that it would invest 2-2.5 crore over the next ten years in expanding India’s renewable energy capacity.

Last year in March, a private equity firm, Actis LLP, announced that it would invest 850 million dollars to build two green energy platforms in India. The first platform will set up grid-connected wind and solar energy parks. The second green platform will provide services to the commercial and industrial sectors.

Government Initiatives

The Indian government has focused on the power sector to promote sustainable industrial growth. The government initiatives to boost the Indian power industry investment are:

The government announced the issuance of green bonds under the Union Budget 2022-23. The government also considered energy storage systems and grid-scale battery systems as infrastructure.

The government allocated 19,500 crores in the Union Budget to boost the manufacture of solar modules of the highest efficiency.

Governmental schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana, Integrated Power Development Scheme, and Ujwal DISCOM Assurance Yojana are increasing electrification in the country.

This year, a parliamentary committee asked the government to undertake measures to increase the loan limit for the renewable energy sector.

Last year, the World Bank approved a loan of 135 million dollars to the West Bengal government to improve the efficiency and reliability of electricity supply in the state. The Indian government also increased funding for domestic solar cells and module manufacturing units last year. The aim of this increased funding, according to the government, is to make India an exporter of solar cells and modules.

The Government of the United Kingdom announced that it would invest 1.2 billion dollars in Indian public and private green projects to help India achieve its target of 450 GW of renewable energy by 2030.

The Ministry of Petroleum and Natural Gas allocated 5,000 crores for setting up ethanol and compressed biogas producing plants. The plants will produce energy from municipal waste.

Between 2018 and 2021, the Indian government spent around 4.36 billion dollars to provide electricity to villages in Jammu and Kashmir.

 

Author

  • The author has done a master's in Environmental science and is currently working as chief Environmental Advisor with New Delhi State Government.

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