New Delhi: In what is being marked as a turning point for India’s green economy, investments in the country’s renewable energy sector doubled over the last five years to around $20 billion in 2018, surpassing the capital expenditure in the thermal power sector, according to a study.

The joint study by Paris-based International Energy Agency (IEA) and Council on Energy, Environment and Water (CEEW) said “reduced risk perception of financiers funding renewable energy projects in India resulted in investments in the sector doubling over the last five years."

This comes in the backdrop of India’s additional clean energy investment requirement of around $80 billion till 2022, growing more than three-fold to $250 billion during 2023-30.

“Over the period from 2014 to 2018, interest rate spreads for both wind and solar PV declined by 75 to 125 basis points. This indicates declining risk perceptions," the report said, adding that “Ambitious targets, supportive policies, and falling technology costs have improved the attractiveness of financing utility-scale solar PV and wind projects. By May 2019, utility-scale installed capacity of solar PV was over 27 GW and wind was more than 36 GW."

India has become one of the top renewable producers globally with ambitious capacity expansion plans. The country has an installed renewable energy capacity of about 80 gigawatts (GW) and is running the world’s largest renewable energy programme with plans to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments.

“While the costs of debt and equity financing together accounted for close to 60% of the levelised cost of electricity for solar PV and wind generation in India, improvements in the terms of finance for renewables projects have played an important role in lowering tariffs," the report said.

India has witnessed a record low solar tariffs of ₹2.44 per unit. India’s wind power tariff also fell to a record low of ₹2.64 per unit. Of the targeted 175GW of clean energy capacity by 2022, 100GW is slated to come from solar projects. Of this, 60GW will be from ground-mounted, grid-connected projects, and 40GW is to come from solar rooftop projects. Wind power projects will contribute 60 GW.

“The weak availability of long-term, fixed-rate debt remains a constraint for all power generation investments, raising uncertainty over future financing costs for new plants and the refinancing of existing ones," the report said.

In an attempt to boost India’s emerging green economy, the ministry of new and renewable energy (MNRE) has been trying to impress upon the Reserve Bank of India for removal of priority sector lending limit for the renewable energy sector. This comes in the backdrop of the National Democratic Alliance (NDA) government’s agenda of providing reliable, sustainable and affordable electricity to the masses in its second term at office and focusing on tweaking the energy mix towards green energy sources.

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