The Right Time to Invest in India’s Renewable Energy Market?

As the energy market is on the steady decline in United States, perhaps we should turn our attention to the focus of the energy sector in India.  Although India is the 4th largest importer of oil and the 15th largest importer of petroleum products and LNG globally, they are shifting heavily to focus on renewable energy efforts in the country.  

India has many factors influencing this strategic decision from the government: there are currently 1.25 billion people living in India, a growing middle class, and many of the world’s most polluted cities.  13 of the top 20, to be exact.  India is also the 3rd largest producer of greenhouse gases, following behind China and the U.S. However, 400 million people in India still somehow do not have access to electricity.  Inflation is decreasing, urbanization and per capita energy consumption are increasing, and the government is actively seeking to increase foreign investment in the country.  

You might be asking, what exactly is India doing to focus on renewable energy?  The answer is: many things.  India is rapidly developing and employing renewable energy sources, building government agencies to support these initiatives, investing heavily in R&D, attracting potential investors to India, and establishing key partners to move the work forward.   

The government is directly investing a ton of money in the renewable energy market in India and recent policy changes show that there is no near end in sight of this focus.  The government created the Indian Renewable Energy Development Agency: a financial institution dedicated solely to funding renewable energy products.  India is targeting five industrial corridor projects where manufacturing is a key driver.  They are focusing on converting these industrial centers to using renewable energy, with the hopes to lower their emissions.  The India government also established the Ministry of the Government of India, whose specific mission is to develop and deploy innovative renewable energy sources.  The government established the National Solar Mission, to focus specifically on the use on solar energy in the country.

The government is also attempting to provide energy to rural areas using only clean energy by driving down the price of renewable energy and getting the necessary infrastructure in place for these regions.  India is currently has the 5th largest power generation portfolio, they are the 5th largest wind energy producer, and they are also heavily focusing on solar energy.

The Indian government is setting very ambitious renewable energy goals as they look to decrease emission.  This is important given that India is a large factor contributing to global warming.  The Indian government aims to have over 40% of the country’s total power capacity to be using renewable sources 2030. Today is accounts for roughly 15% of the country’s total power capacity, and the government is actively working to drive down the cost of renewable energy. They have also set a goal to achieve 20GW of solar energy by 2022.  Some energy researchers argue that these goals are too ambitious and even unattainable, but officials hope that these ambitious goals will only further propel the industry.   

India is also doing a lot to attract foreign investors to the country.  For example, India recently held their first renewable energy investor conference.  They have forged a partnership with the American government to invest in the renewable energy markets of India –  in fact, the “United States Agency for International Development just gave $41 million to fund renewable energy efforts in India, and an additional $8 million to fund innovation and research in the clean energy sector.”

All signs point to the fact that the time is ripe to invest in the renewable energy market in India.

Lauren Neupert

MBA Candidate 2016