According to reports, Goldman Sachs Group Inc., Asian Development Bank (ADB) and South Asia Clean Energy Fund have invested $140 million in ReNew Power Ventures Pvt. Ltd, signalling growing investor interest in India’s clean energy sector. In an announcement on Thursday, ReNew Power said that the total equity investment in the firm has reached $390 million and will help the firm to more than double its project portfolio from 460 megawatt (MW) to 1,000 MW by 2015.
“This investment comes at a time when there is a need to accelerate growth in the clean energy sector driven primarily by surging demand and the current energy deficit faced by the country,” Sumant Sinha, chairman and chief executive officer, ReNew Power, said in an emailed statement.
The investment comes in the backdrop of Indian government’s plan to revive interest in the wind energy sector by reintroducing tax and fiscal incentives that were withdrawn. India’s ministry of new and renewable energy has taken up the issue of restoration of accelerated depreciation benefits with the finance ministry. The reinstatement of accelerated depreciation benefits will reduce tax and strengthen cash flows. Developing renewable energy will also help reduce dependence on coal, which is in short supply domestically, requiring imports of the mineral to fuel most of India’s power plants.
India’s per capita power sector consumption at around 800 kWh is among the lowest levels in the world, according to the World Bank. While the country has an installed power generation capacity of 248,509.63MW, it faced a peak deficit of 4.1% in May. Of India’s installed power generation capacity, 31,692.14MW is fuelled by renewable energy. Of this, 21,200MW is wind power capacity.
According to the BP Statistical Review of World Energy 2014, “Renewables now account for more than 5% of global power output and, including biofuels, for nearly 3% of primary energy consumption.” “Globally, wind energy (+20.7%) once again accounted for more than half of renewable power generation growth and solar power generation grew even more rapidly (+33%), but from a smaller base,” the BP Statistical Review added.
The National Action Plan on Climate Change recommends India generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020. The Narendra Modi-led government has stressed on the need for reinforcing energy security. The government’s energy security plans include harnessing renewable sources such as solar energy, bio-mass and wind power along with coal, gas, hydropower and nuclear power to bring about an “energy revolution” in the country. India, which is dependent on imports to meet its energy demand, has an energy import bill of around $150 billion. This is expected to reach $300 billion by 2030, requiring a $3.6 trillion payout by 2030.