India’s Lead Role in The New Wave of Energy Sector Growth

The Intergovernmental Panel on Climate Change (IPCC), a United Nations climate science body released the Working Group III report.

It contained a serious warning for the entire world. 1.5 degC cannot be achieved unless there is immediate and significant emission reductions in all sectors. India is one of the largest and fastest-growing large economies. It plays an important part in helping the world meet its climate goals. According to a report released by the Institute for Energy Economics and Financial Analysis, (IEEFA) India’s energy sector is capable of making a significant contribution to deep and immediate emissions reduction.

Shantanu Srivastava (IEEFA energy finance analyst) said that energy security is a top national priority due to rampant import fuel fuel inflation. India is taking action to combat climate change by setting ambitious domestic clean energy targets, and implementing bold policies and reforms that will support them.

“Domestic as well as international power sector players are quickly scaling up Indian renewable infrastructure capacity and are preparing to embark on the next wave sectoral reforms.”

The government is implementing several reforms and policies known as the “big bang”, which will accelerate the transition to a more resilient, sustainable energy economy. It also aims to increase investment, employment, and potential replacement of imports.

These include the green hydrogen policy and green ammonia policies, production-linked incentives schemes for solar module and battery manufacture, market based economic dispatch, general network access, green energy corridor schemes, and general network access. They encourage investment in the grid sector as well as private ownership through the National Monetisation Pipeline (discoms) and privatisation of distribution businesses (discoms).

Srivastava states that the next decade will be a transformative period for global energy markets. “New leaders will emerge and existing corporate giants could become obsolete if the transition to the new economy is not undertaken.”

Srivastava points out the main themes shared by larger industry players: diversification across the value chain and leapfrogging competition when it comes to adopting new zero-emission technologies that are still in development, as well as increasing the number of value-added products.

Energy companies are betting on green hydrogen’s rapid decline in production costs in order to maximize its use in energy storage and mobility. They also plan to explore manufacturing electrolysers to make green hydrogen from renewable energies. Adani Group and Reliance Industries aim to produce green hydrocarbons at or below the price of their fossil fuel counterparts.

Industry players in energy storage are trying to turn renewable energy from low-cost, intermittent sources into dispatchable, controllable energy. Greenko and JSW Energy are big believers in pumped hydro storage. They have several development plans.

Players have been fully involved in the government’s solar module program. They also purchased stakes in state discom companies, which integrate the last link in the power sector value chain. Tata Power, which has seen impressive results in its Delhi discom in the past decade, hopes to achieve similar results with its Odisha discom. It also has current and pipeline manufacturing capabilities for module manufacturing.

Operators such as Adani Transmission and IndiGrid InvIT have been competing for greenfield and brownfield assets in transmission as government agencies seek to expel large amounts of renewables generation capacity.

Companies see potential in power trading via exchanges and contracting customers through open access and merchant capabilities as the power markets become more democratic and integrated.

Many industry players have moved away from commoditised electricity generation and distribution to provide value-added products like peak power supply, corporate decarbonization solutions and round-the-clock supply. These products fetch higher margins, and offer growth opportunities in an ever-evolving energy economy.

Srivastava states that India must accelerate its transition process by accelerating clean energy investments. He cites the importance of such policies and corporate actions to help build momentum.

This depends on clear and transparent policy and availability of long-term, cost-effective financing that can fuel ambitious infrastructure plans by industry players. Both domestic and international capital providers have provided equity and debt.

Srivastava claims that companies have improved their disclosure profiles in order to attract large amounts of capital from around the world.

He says that India and other developing economies have a huge opportunity to become energy independent and grow in a climate-resilient manner. This will create a vibrant corporate sector that can best utilize these global financial capital markets priorities and funding capabilities.