Modi’s 175 GW green energy target for 2022 looks a distant dream; here’s what may act as barrier

Modi government’s ambition of 175 GW renewable energy by 2022 may fall short of the target, as it would require at least Rs 3.5 lakh crore from international resources, said a report by India Ratings. One of the key barriers to attract investments in the Indian green energy sector is the lack of suitable financing structures such as flexible repayments to navigate counterparty issues, widespread bill discounting, and low-cost capital to optimise the return on investments, the report added. However, the use of novel financing measures along with greater participation from lenders and international RE players would play a pivotal role in attaining the green energy target, it further said. 

The recent transition in the Indian renewable energy sector is believed to be a safer return generating investment than before. In this context, the role of international RE players becomes more important, given their available cost of funds advantage, access to a large pool of funds, and strong balance sheets.

Last month, Prime Minister Narendra Modi had said that there are huge renewable energy deployment plans for the next decade, which are likely to generate business prospects of the order of around $20 billion per year. Inviting the global investors, developers, and businesses to join India’s renewable energy journey, PM Modi had added that India has a very liberal foreign investment policy for renewables and the foreign investors can either invest on their own or they can collaborate with an Indian company. After the success of PLI in electronics manufacturing, the government has decided to give similar incentives to high-efficiency solar modules. 

Meanwhile, India has set an ambitious target of 450GW of RE by 2030, while the country is already working on achieving a short-term target of 175GW of RE by 2022. Out of the 2022 target, India has installed 88.7 GW capacity of green energy until August 2020.