Channel: Investment

26 April, 2011
Clean energy drive: India now in top 10 Clean Energy Investment destination
Tables & Graphs

India is now among the top 10 nations in clean energy for investors, featuring for the first time in the global clean tech finance and investment destinations. On the globe renewable energy finance and investment grew by 30% in 2010 and the figure reached to $ 243 billion as compares to the year before. The renewable energy continues to be as one of the most dynamic and competitive sector in the world, having witnessed more than 600% increase in finance and investments since 2004.
The investment numbers have gone down for the leading economies, with investments in the G-20 countries accounting for more than 90% of the global total. China, Germany and India are now doing very well in attracting financers in clean energy sector because these countries have national policies that support renewable energy standards, carbon reduction targets and they also have incentives for investment and production and that create long-term certainty for investors. The impact of such incentives is clearly visible as China accounted for more than 25% of the global total with installed capacity increased to 388 GW from wind, small-hydro, and biomass, solar, geothermal and marine.
In 2010, India attracted $4 billion in private investments, ranking 10th among the G-20 countries. It also ranked 10th for five-year growth rates for renewable energy capacity and seventh worldwide in the amount of installed capacity. Over the next decade, India is projected to increase its renewable energy generating capacity to 91 Gigawatts, five times than what is currently installed. In order to achieve the above mentioned targets in the Power Sector, Indian policy makers have taken number of path breaking initiative in the recent past, both in terms of policy changes and new programmes responsible for the upliftment of the power sector in India.
The electricity sector in India supplies the world's 6th largest energy consumer, accounting for 3.4% of global energy consumption by more than 17% of global population. About 64.75% of the electricity consumed in India is generated by thermal power plants, 21.73% by hydroelectric power plants, 2.78% by nuclear power plants and 10.73% by Renewable Energy Sources. More than 50% of India's commercial energy demand is met through the country's vast coal reserves.
Though coal remains the backbone of India’s energy policy, emphasis on renewable energy has grown as India needs to cut its emission to prepare itself in case of any future mandatory obligation on the world’s no 3 greenhouse gas emitter to cut pollution while fostering economic growth. However, demand supply gap remains the main driver as Asia’s third largest economy aims to achieve double digit growth rate. It is already facing an acute energy scarcity which is hampering its industrial growth and economic progress. Setting up of new power plants is inevitably dependent on import of highly volatile fossil fuels. Thus, it is essential to tackle the energy crisis through judicious utilization of abundant renewable energy resources.
To mitigate the energy and green house concerns, India now aims to add about 35 Gigawatts of renewable power generation capacity by 2015,at an investment of about $55 billion as it seeks to cut a power deficit and carbon emissions. Most significantly bulk of these investment has to come from private firms and so investor confidence in Indian clean energy is a good sign for India.To incentivize the renewable energy sector, India already makes loans to companies building alternative energy power plants and provides tax breaks and tariff subsidies to encourage the renewable industry and a gradually shift to a low-carbon economy.
The Market Potential to sustain the GDP Growth rate of India @ 8% plus per annum needs the power sector to grow at 1.8 - 2 times the GDP rate of growth. This would mean a YOY capacity addition of 18,000 - 20,000 MW to achieve this ambitious plan of moving India to a Developed Economy status. Moreover, the Target Mission: ‘POWER for All by 2012’ would mean achieving the target of 1000 KwHr (Units) of per capita consumption of electricity by this period.
Based on the market dynamics, the Indian renewable energy sector is showing positive activity and this Bull Run is likely to continue without many impediments. With a vast scope of investment in the power sector Indian government is expecting an investment of $300 billion to come in the XII Five-Year Plan. Clearly Clean energy is the most desired way to go forward in this case and so India looks favourable to be the one of the most desirable places for investment in clean energy. So in this context it won’t be exaggerated to say that India will be able to improve its position further in the leading clean energy investment destinations and might even outstrip China to be the leader in the segment.

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