India’s Renewable Revolution Has a Funding Drawback

Felicity Bradstock

Felicity Bradstock is a contract author specialising in Power and Finance. She has a Grasp’s in Worldwide Growth from the College of Birmingham, UK.

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• India has made important strides in renewable vitality deployment, notably in solar energy, however nonetheless closely depends on coal for almost all of its electrical energy technology.
• The nation’s bold local weather objectives, together with net-zero emissions by 2070, are threatened by insufficient funding and the necessity for important infrastructure enhancements.
• To realize its targets, India requires substantial overseas funding and centered improvement in battery storage, grid modernization, and distributed vitality options like rooftop photo voltaic and microgrids.

India has been investing closely within the improvement of its renewable vitality sector in recent times to help a inexperienced transition. Whereas the federal government has repeatedly known as on the worldwide group to help its transition with funding to little avail, the state has financed a variety of renewable vitality and clear tech initiatives. Nevertheless, the South Asian nation remains to be closely depending on coal, oil, and fuel, and its energy demand is rising bigger yearly, suggesting that extra must be carried out to speed up the deployment of recent inexperienced vitality capability.

In 2023, India generated 22 p.c of its electrical energy from renewable vitality sources, which, though an enchancment, was nonetheless beneath the worldwide common of 39 p.c. The expansion in India’s photo voltaic vitality capability allowed it to overhaul Japan because the world’s third-largest solar energy generator, contributing 5.9 p.c of worldwide solar energy progress. Hydropower stays India’s largest clear vitality supply, at round 8 p.c, whereas photo voltaic and wind energy collectively present 10 p.c of India’s energy combine. 

Nevertheless, India continues to rely closely on fossil fuels for its vitality combine, with coal, oil, and fuel contributing to 78 p.c of its electrical energy technology in 2023. Coal accounts for practically 50 p.c of India’s put in energy capability and over 70 p.c of energy technology.

In line with India’s Ministry of New and Renewable Power, “In 2024, the nation made important strides in photo voltaic and wind vitality installations, coverage developments, and infrastructural enhancements, setting the stage for bold targets in 2025. With a dedication to attaining 500 GW of non-fossil fuel-based vitality capability by 2030, India is rising as a worldwide chief in clear vitality. As of twentieth Jan 2025, India’s complete non-fossil fuel-based vitality capability has reached 217.62 GW.” Roughly 24.5 GW of photo voltaic capability and three.4 GW of wind capability have been added final yr.

Regardless of important progress in recent times, India nonetheless has an extended approach to go to decarbonize its energy sector. Whereas India’s per capita emissions are a lot decrease than these of many different international locations, it has turn into the third-largest emitter of greenhouse gasses yearly. The South Asian nation has the biggest inhabitants on this planet, and whereas it’s at the moment thought of a lower-middle-income nation, it’s the world’s fastest-growing massive economic system.

India should act now if it hopes to decarbonize over the approaching a long time towards its purpose of net-zero emissions by 2070. The federal government has made a number of bold vitality targets to encourage this shift, together with attaining an influence combine with a minimum of 50 p.c renewables by 2030 and vitality independence by 2047. Nevertheless, with the ability demand anticipated to quadruple by 2050, India faces an uphill battle in attaining these goals.

Local weather change is changing into an more and more greater risk to India with over 75 p.c of Indian districts prone to excessive climate, with cyclones, floods and drought changing into extra commonplace. Subsequently, India is seeing the direct risk of not finishing up a inexperienced transition quick sufficient.

To assist decarbonize its energy sector, India should make investments extra closely not solely within the deployment of extra wind and photo voltaic vitality capability but additionally in battery storage. It will assist it to supply a extra steady provide of fresh electrical energy to the grid and transition away from fossil fuels. The federal government should additionally considerably enhance the nation’s transmission infrastructure to organize for brand new clear vitality capability to be added and keep away from losses in energy transmission, a problem that plagues most states in India.

As well as, the event of mini- and microgrids may additionally assist enhance energy entry in rural areas of the nation and scale back the burden on the grid. Roughly 4.59 GW of recent rooftop photo voltaic capability was put in in 2024, marking a 53 p.c improve from the earlier yr. Nevertheless, the deployment of this expertise has been restricted because of an absence of affordability, client consciousness, and the skilled experience required to put in rooftop panels.

The federal government can take plenty of steps to help India’s decarbonization goals, primarily by investing within the deployment of extra clear vitality and battery expertise, in addition to enhancing the nation’s grid system. Nevertheless, to do that, India will doubtless want to draw larger ranges of overseas funding. Present estimates recommend that India must spend roughly $100 billion a yr, or 2.8 p.c of its GDP, to attain its net-zero goal by 2070.

In 2021, India’s Prime Minister, Narendra Modi, known as on developed international locations to set a goal of contributing a minimum of 1 p.c of their GDP to inexperienced initiatives within the creating world. But, India’s inexperienced transition roadmap stays extremely underfunded. Regardless of guarantees of better funding to help low-income international locations in attaining their decarbonization objectives at every year’s COP local weather summit, not sufficient funding has been designated to help a worldwide inexperienced transition. This implies that whereas India is bold in its inexperienced transition goals, with out the mandatory funding, it will likely be extraordinarily troublesome to attain them, which might be detrimental to world local weather aspirations.

By Felicity Bradstock for Oilprice.com

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