From Vision to Victory: India's Renewable Energy Road to 500GW

Executive Summary

India, the third-largest electricity producer worldwide, is undergoing a transformative shift in its energy landscape. With a current renewable energy capacity of 183GW, including large hydropower, the country is making significant strides towards a cleaner and more sustainable future. As peak energy demand is projected to surge from 148GW in FY2014 to 335GW by FY2030, India has set an ambitious target of achieving 500 GW of renewable energy installed capacity by 2030. This research note delves into the key drivers, government initiatives, market dynamics, and prominent players shaping India's renewable energy sector.

Renewable Energy Expansion: A Trajectory of Growth

India's renewable energy capacity has witnessed a remarkable expansion, more than doubling since FY2014. As of FY23, renewables account for an impressive 178GW, representing 41% of the country's total energy capacity. This growth trajectory is underpinned by several critical factors:

• Economic Resurgence: India's recent spike in GDP growth and infrastructure development has fueled the demand for energy, creating a conducive environment for renewable energy expansion.
• Environmental Commitment: The government's steadfast commitment to building a cleaner and more sustainable future has been a significant catalyst for the growth of the renewable energy sector.
• Urbanization and Rural Electrification: The rapid pace of urbanization and the government's efforts to accelerate rural electrification have further propelled the demand for renewable energy sources.
• Railway Electrification: The ongoing expansion of railway electrification has also contributed to the rising demand for clean energy solutions.

Government Initiatives: Paving the Way for a Green Revolution

The Indian government has been at the forefront of driving the renewable energy sector's growth through various strategic initiatives. These measures aim to create a conducive policy environment, attract investments, and accelerate capacity addition:

• National Green Hydrogen Mission: With an outlay of ₹19,744 crore, this mission seeks to boost the hydrogen economy and promote the adoption of green hydrogen as a clean energy solution.
• Wind Energy Boost: The government has set ambitious targets, including 10GW per annum of wind-only projects and floating renewable energy bids of 50GW over FY2024-28, to accelerate wind energy capacity addition.
• Solar Park Scheme Expansion: The Scheme for "Development of Solar Parks and Ultra Mega Solar Power Projects" has been expanded from 20,000 MW to 40,000 MW by 2025-26, showcasing the government's commitment to solar energy.
• Policy Reforms: Implementing uniform pooled tariffs and raising renewable purchase obligations (RPO) targets have been instrumental in fostering a conducive environment for the growth of renewable energy, particularly wind power.

Market Dynamics: Opportunities and Challenges

The renewable energy sector's compelling growth is driven by a confluence of factors, including decarbonization efforts, energy security concerns, and declining costs. Globally, capacity additions have surged by an impressive 50% year-over-year in CY23, reaching a record 507GW. India, in particular, has witnessed a capacity increase of over 100GW in the last decade, with expectations of tripling by 2030.

The domestic wind energy market, albeit with limited competition, presents a significant opportunity for Original Equipment Manufacturers (OEMs), with substantial orders already under execution. However, the sector is not without its challenges. Policy instability, land acquisition hurdles, and transmission access issues pose significant obstacles to the sector's growth. Addressing these execution bottlenecks and ensuring policy consistency will be crucial in harnessing the sector's full potential.

Key Players: Driving the Renewable Energy Revolution

Amidst this transformative landscape, two key players stand out in India's renewable energy sector:

1. Suzlon Energy Ltd: With a dominant ~32% share in India's wind turbine market, Suzlon Energy has demonstrated remarkable resilience. Despite past challenges, the company achieved a net cash position in 9M FY24 for the first time since FY06. With integrated operations, a strong balance sheet, and the launch of new 3MW wind turbines, Suzlon is poised to drive the expansion of India's wind capacity towards the 100GW target. An expected 64% PAT CAGR over FY2024-FY26 and the company's market leadership make it an attractive investment proposition.

2. Inox Wind Ltd: As one of India's leading wind turbine manufacturers, Inox Wind boasts a capacity of 2.5GW. The company has successfully reduced its debt to INR 500 Cr and has a robust order book of 2,600GW. This sets the stage for significant capacity additions of 450MW, 700MW, and 1000MW over FY2024-26. Inox Wind's focus on an asset-light model and its expansion into the operations & maintenance segment further strengthens its growth prospects.

3. ReNew India PLC: ReNew, one of India's largest renewable energy IPPs, has grown rapidly since 2011 to a current renewable asset base of 13.8 GW. Its ~8.3 GW of commissioned capacity powers 14 million homes, representing 1% of India's electricity demand and 0.5% of carbon emissions. As a global top-10 renewable company, ReNew provides decarbonization solutions across green hydrogen, energy storage, and carbon markets. Its social initiatives have impacted 1 million lives, and it aims to be net-zero by 2040, garnering top ESG ratings and industry accolades.

Conclusion: Powering a Sustainable Future

India's renewable energy sector is on the cusp of a transformative journey, with its capacity expanding from 76GW in FY2014 to 178GW by FY23 and targeting 500GW by FY30. This growth is propelled by a combination of economic development, urbanization, and strong government initiatives. Despite challenges such as land acquisition and policy uncertainties, key players like Suzlon Energy and Inox Wind are at the forefront of driving the market towards achieving the country's ambitious renewable energy goals.

As India strives to power a sustainable future, the renewable energy sector's success will hinge on strategic investments, policy coherence, and the ability to address critical bottlenecks. By harnessing the vast potential of renewable energy sources, India is not only charting a path towards energy security but also positioning itself as a global leader in the fight against climate change. The sector's evolving dynamics present compelling investment opportunities for those seeking to be part of this green revolution.

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