Investments in the renewable energy sector may climb as much as 35 per cent as global investors eye Indian markets with a bag full of investments. Whetted global investor interest and enabling regulations can fuel the addition of as much as 35 GW of renewables capacity, involving Rs 1.5 lakh crore of investments, in the three years through fiscal 2023, showed a CRISIL estimate. The investment may see a 35 per cent growth over the Rs 1.1 lakh crore invested in the past three fiscals, the estimate further showed. On the back of India’s drive towards the usage of clean energy, the project tenders are getting oversubscribed amid strong participation by global investors.
Global investments have risen from around 15 per cent of total capital investment in fiscal 2015-18 to around 50 per cent of total investments in fiscal 2018-20, said Hetal Gandhi, Director, CRISIL Research. Going forward, global investments and internal accruals can generate around half of the Rs 1.5 lakh crore investments required, Hetal Gandhi added.
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The removal of tariff caps, consistent regulatory policies, and rising renewable energy targets in India have contributed to attracting investors’ interest. The Crisil report underlined that even during the Covid-19 pandemic, the ‘must-run’ status of projects has ensured continuous power offtake despite weak demand. Further, enablers such as extensions to under-construction projects have helped developers deal with mobility constraints, supply hurdles, and labour shortages.
However, the financial constraints of the financial sector may pose some threat to the blooming investment in the sector. A sagging economy and a weak financial sector may pose challenges to fund the credit requirement for this growth, however, with growing scale, the sector will churn out around 18 GW of fresh stabilised portfolio with top developers over the next three years that are amenable to refinancing, said Ankit Hakhu, Director, CRISIL Ratings. That means an aggregate debt capital of Rs 70,000 crore can be freed up to fund greenfield capacities, he added.