How is renewable energy a game changer for India's energy requirements?
How World's Richest fighting for Renewable Energy
Renewable Energy is derived from natural sources such as the sun, wind, and water. It is replenished at a higher rate and is inexhaustible.
Renewable Energy gained momentum after the effects of climate change became evident. Climate Change can be catastrophic for the environment and human beings. It can cause the extinction of flora and fauna and the rise of sea levels.
India & Renewable Energy
India has been very bullish on renewable energy. It will help India to ensure energy security and combat climate change. Producing renewable energy in India is cost-efficient as India has abundant renewable energy sources.
Why is the renewable energy sector flourishing in India?
The Renewable Energy Sector is flourishing in India due to various reasons-
The Union Budget (2022-2023) allocated Rs 19,500 cr for a PLI scheme to boost the manufacturing of high-efficiency solar modules.
The government launched Mission Innovation CleanTech Exchange to accelerate clean energy innovation.
India is witnessing rising investments in the renewable energy sector. India's non-conventional energy sector received an FDI inflow of US$ 11.62 bn between April 2000 to March 2022.
India is a growing economy and its energy requirements are expected to reach 817 GW by 2030( according to The Central Electricity Authority estimates).
India's Renewable Energy Ambitions
Prime Minister Shri Narender Modi at Glasgow Climate Summit in 2021 made significant announcements.
India will get its non-fossil energy capacity to 500 GW by 2030.
India will meet 50% of its energy requirements from renewable energy by 2030.
India will reduce the total projected carbon emissions by one billion tonnes from now till 2030.
By 2030, India will reduce the carbon intensity of its economy by more than 45%.
By 2070 India will achieve the target of Net Zero.
Current Status of Renewable Energy Production in India
India ranked 3rd in the renewable energy country attractive index in 2021. The Country has the 4th largest installed capacity of wind power and the 3rd largest market for new solar photovoltaic capacity.
India has 160 GW of installed renewable energy capacity (May 2022). India's renewable power-generation capacity has increased by 153.3% ( from FY16 to FY23). 39.1% of the total energy was derived from non-fossil-based sources
Solar Energy outweighs other forms of renewable energy due to its favourable location in the solar belt. India's installed solar power capacity has increased by 18 times from March 2014 (2.63 GW) to 2021 (49.3 GW). India generated 47.64 BU of solar power in the first half of 2022.
India has the 5th largest hydropower production capacity in the world. India has a hydropower potential of around 145 GW and 50 GW is being utilized.
Hydropower installed capacity has increased from 35.9 GW ( March 2008) to 46.85 GW( July 2022).
India has the 4th largest wind power capacity in the world. The total installed capacity is 39.25 GW ( 31st March 2021).
India has a biomass energy capacity of 10 GW.
Challenges and Opportunities for India's Renewable Energy Sector
The challenges for India's Renewable Energy Sector are-
Coal-based power plants have an installation cost of Rs 4 crore per MW. Wind-based plants require an investment of Rs 6 crore per MW and solar-based power plants require Rs 18 crore per MW.
Low Social Acceptance
The renewable-based energy system has low acceptance rates despite heavy subsidies provided by the Indian Government.
Lack of Manpower
The Indian Renewable Energy Sector is facing a manpower shortage. Skill upgradation and training of existing manpower are essential to achieve Renewable Energy production goals.
Lack of Systematic Planning and Integration
Renewable Energy power plants require proper systematic planning and integration. Planning and integration ensure good productivity and stupendous energy outcomes in the future.
Solar panels, modules, and other accessories are imported from other countries. Importing increases their value by 20% to 25%. In 2019-2020 India imported solar wafers, cells, modules, and inverters worth USD 2.5 billion.
India must focus on scaling its domestic production to meet its renewable energy goals.
Opportunities for India's Renewable Energy Sector
The opportunities for India's Renewable Energy Sector are-
India's Renewable Energy sector can create around 3.4 million jobs by installing 280 GW of solar and 140 GW of wind capacity. The wind and solar energy sector employs 111,140 individuals. The number can be increased exponentially in the upcoming years.
India must focus on skill upgradation and training.
India is the third largest oil-consuming and importing nation. Last year India spent $ 119.2 Billion on importing oil to meet the energy demands of a booming economy.
Renewable Energy can ensure energy security and trim down expenses. It will also promote energy access, energy efficiency, energy sustainability, and energy security.
Foreign Direct Investments
India has allowed FDI of 100% in the renewable energy sector under the automatic route. The FDI in India increased from $797.21 million in FY 2020-2021 to $1.6 billion in FY 2021-2022.
India's renewable sector is very lucrative and attractive for investors as it receives government support. The Indian Renewable Energy sector can contribute about $1 trillion by 2030 and $15 trillion by 2070.
India will be impacted heavily by climate change. India will be economically harmed by climate change and will face rising sea levels, water scarcity, and extreme weather patterns.
Investing in the Renewable Energy sector can help India to mitigate climate change.
Renewable Energy Companies In India
Tata Power is India's largest renewable energy player. Tata Power has an installed capacity of 932 MW wind power generation. The plants are spread across seven states of India ( Maharashtra, Gujarat, Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh, and Madhya Pradesh).
Tata Power has a strong portfolio of 2,688 MW solar generation capacity. Tata Power has commissioned a 300 MW solar plant in Dholera Gujarat.
Tata Power Mission
Tata Power plans to invest more than $9.5 billion in the upcoming five years. The company will also develop a 10,000 MW renewable energy capacity in Rajasthan in five years.
Tata Power will double its capacity from 13.5 GW in 2022 to 30 GW by 2027.
Stock Market Performance
Tata Power stock prices rose from Rs 75 in 2016 to Rs 225 in 2022. The stock provided a 4.2% earning yield.
ICICI Securities believes that the stock target price will hit Rs 262 per piece with an upside potential of 16%.
NTPC Renewable Energy
NTPC Renewables has commissioned a capacity of 2,332 MW of Renewable Energy projects. NTPC Renewables has projects of capacity 1295.52 MW under implementation.
NTPC Renewable Energy plans to increase Renewable Energy capacity to 35 GW by 2027. The company expects to generate 10 billion units of green energy in 2022-2023.
Stock Market Performance
NTPC Renewable Energy will be listed in 2022-2023.
Reliance Power Limited
Reliance Power Limited is part of Reliance Industries. Reliance Industries is India's largest private company with a revenue of $ 73.8 billion( March 2021).
Reliance Power Limited focuses on decarbonization and the creation of green ecosystems. The company has commissioned a 40 MW solar PV project in Pokhran Rajasthan and a wind project of 45 MW in Vashpet Maharashtra.
Reliance Power Vision
Reliance Power plans to set up 20 GW solar generation capacity by 2025. The company plans to start a 10 GW solar cell and module-making production by 2024.
The company will transition from gray hydrogen to green hydrogen by 2025. Reliance Power is in advanced talks with global electrolyzer technology companies for manufacturing.
Stock Market Performance
The stock price of Reliance Power was Rs 44 in 2015 and Rs 13.15 in August 2022. The stock has an earning yield of 6.36%.
There is no recent recommendation for Reliance power from brokers
Foreign Brokerage Morgan Stanley said that the company's new investment could double its net profit by 2027.
The firm believes that Reliance Industries is entering its fourth Capex cycle of the century with an investment of $ 50 billion over three years in retail, telecom, petroleum & chemical, and green energy.
JSW Energy is India's leading power-producing company. The company believes in the optimal utilization of resources. JSW Energy generates 4,559 MW out of which 3158 MW is thermal power, 1391 MW is hydropower and 10 MW is solar power.
JSW Energy Mission
The company plans to generate 20 GW by 2030. JSW Energy is constructing 2.25 GW renewable energy projects. The company has signed an exclusivity pact with Mytrah Energy to acquire Vector Green.
Stock Market Performance
Stock prices of JSW Energy have risen from Rs 79 in 2017 to Rs 329 in 2022. The stock has an earning yield of 5.65% and a dividend yield of 0.64%.
ICICI Direct recommends JSW Energy stock. The company has good growth in quarterly profits. The stock target price according to the brokerage is Rs 370.
Adani Green Energy Limited
Adani Green Energy Limited has a capacity of 20,434 MW renewable energy portfolio. The portfolio is spread across 12 states and generates 5711 million units.
Adani Green Energy's mission
Adani Green Energy Limited aims to have a portfolio of 25 GW of renewable energy projects by 2025.
Stock Market Performance
Adani Green Energy stock prices rose from Rs 32 in 2019 to Rs 2315 in 2022. The stock has an earning yield of 0.81%.
Leading Brokerage Firm Ventura Securities has given a buy option to Adani Green Energy and Adani Enterprises. The brokerage believes that the stock can have a potential gain of 71% in 24 months.
For your convenience here are some broker recommendations:
Renewable Energy can be a game changer for India's economy as it will attract FDI which will empower India's economy. Renewable Energy will help in ensuring energy security and environment conservation.
Sources: Value Research, IBEF, Economic Times