India is taking strong steps towards realising its commitments made at the Paris climate summit. A recent report from the Centre for Financial Accountability (CFA), Coal vs Renewables Finance Analysis, shows coal-fired projects have seen a decline of 90% in investments from 2017 to 2018. The report highlights the incredible transition of energy investment in India, towards renewable projects from coal projects, by analysing 54 energy projects—comprising both renewable and coal-fired projects—that reached their financial closure in 2018. The report finds that the projects attracted a total funding of Rs 30,524 crore, 80% of which went to renewable energy projects and 20% to coal power projects. The high-scale investment in renewable energy in India has been noted by the International Energy Agency (IEA), according to which India is the largest growing market for renewables in the world and the country’s investment in the renewable energy sector grew at a rate of 12% in 2018.
The report shows that, in 2018, five coal-fired projects having a combined capacity of 3.8GW had received investments worth Rs 6,081 crore, as opposed to 12 such projects—with a combined capacity of 17GW—getting a financing of Rs 60,767 crore in 2017. As far as the renewable energy sector is concerned, it saw an increase in investments of Rs 1,529 crore in 2018 over 2017. Of the 54 projects assessed, 49 were renewable energy projects, having a combined capacity of 4.7GW, and received loans of Rs 24,442 crore in 2018—60% were for solar PVs and 40% for wind projects. The CFA also noted that primary financing for coal-fired power projects shrank by 93%, whereas for renewable projects it increased by 10% in 2018.
In coal projects, investment amounting to Rs 3,938 crore came from majority government and majority government-owned financial institutions in 2018, while for renewable energy projects majority investments came from privately-owned commercial banks, who contributed three-quarters of the funding, i.e. Rs 18,263 crore. However, there is a disparity when it comes to region-wise investments. States such as Karnataka, Madhya Pradesh and Gujarat attracted around half of the entire country’s renewable projects—23 such projects, both for solar PVs and wind energy—and others like West Bengal and Chhattisgarh didn’t get any (the CFA report only studies solar PV and wind energy projects, and not the entire renewable energy ecosystem). The trend reflects India’s ongoing efforts towards enhancing green energy, and reducing pollution caused by fossil fuels. Even as some developed countries such as the US have backed out from the Paris agreement, India is setting the tone for a development model that is needed to tackle climate change.