India’s renewable energy and electric vehicle segments are set for a sprint. Ambitious targets have been set for the coming decade, and at the heart of this step change is the gigantic investment required to meet the country’s renewable energy goals and its transport sector electrification targets, as stated in a report from leading credit rating agency ICRA Ltd. At a recent media roundtable, ICRA experts provided some useful insights into how the country is progressing toward such objectives and growth opportunities.
Targets of Renewable Energy Growth
Based on this, ICRA believes the installed renewable energy capacity in the country would reach 440 GW by 2030. This is more than double the country’s current installed capacity of 200 GW. Indeed, it is precisely these intentions of scaling that justify the increase in the capacity required to meet the government’s Renewable Purchase Obligation, which aims for 43 percent by the end of the decade.
To achieve the ambitious target of 250 GW, India will have to invest big time in the renewable energy sector. According to Vikram V, Vice President & Co-Group Head, Corporate Ratings at ICRA Ltd, investment crossing over Rs 3 lakh crore annually will be required for the next five or six years to meet the target.
The same was added by Girish Kumar Kadam, Group Head Corporate Sector Ratings at ICRA, who emphasized that considerable development has already occurred in the form of renewable energy capacity. According to him, that had been on account of quite robust policy initiatives. However, several challenges persist, mainly in energy storage, grid integration, and domestic manufacturing of renewable energy equipment.
Having taken great strides, the renewable energy sector in India, however, remains vulnerable and susceptible to the forces of change. According to Kadam, one of the biggest challenges is energy storage. With an increasingly large share of renewables in the energy mix, there is a need for reliable solutions that can ensure a stable energy supply. GRID INTEGRATION becomes another critical challenge, since the existing infrastructure of India needs to be upgraded to provide space for a greater share of solar and wind power-based intermittent resources.
Manufacturing of renewable energy equipment locally would be another critical challenge. Since India is rapidly relying on renewable technologies, it has to devise full manufacturing capabilities. Such diversification would considerably reduce import dependency and support the Make in India initiative, strengthening the country’s energy security.
Despite all this, Kadam showed optimism towards the future of this sector stating that demand for cleaner sources of energy becomes more intense and therefore would present enormous investment opportunities. He admitted that if urgent action is done in fighting such issues, one will unlock the true power of the renewable energy sector.
Electric Vehicle Market Outlook
The electric vehicle market in India too is expected to gain strongly till 2030 on the back of a renewable energy sector. In its presentation, rating agency ICRA predicts that by FY 2030, electric two-wheelers will garner 25% of new sales, and electric three-wheelers will be 40% of new sales.
As per ICRA, electric vehicles are going to be an integral part of the transition toward a lower-carbon economy and achieving India’s clean energy goals.
Electric buses will constitute 30% of all the new vehicle sales.
These plans are part of government efforts to speed up the transition to electric mobility that will reduce carbon emissions and dependence on fossil fuels. All these, however, will be steered through significant investment in the EV ecosystem, especially regarding recharging infrastructure and the localization of parts for electric vehicles.
The estimated investment is nearly Rs 25,000 crore ($3 billion) into the development of EV charging stations and promotion of the domestic manufacture of EV components in three to four years from now. That is crucial to building a robust and self-sustaining EV ecosystem in India, while at the same time providing support for the overall objectives of the country in respect of reduction of emissions and onward movement towards sustainable development.
Investment Opportunities in the EV Sector
This would bring about enormous investment opportunities for both domestic and international players as the sector of electric vehicles develops rapidly. Further, it will encourage investments in battery technology and charging networks, as well as manufacturing of EV components, due to higher demand for electric vehicles.
With the trend in electric mobility being driven forward on a global scale by countries all around the world, hastening their quest for cleaner modes of transport, India is likely to become an important location for investors across the globe, as investors in other parts of the world seek to capitalize on the rise of this shift to sustainable transportation.
Energy Sector and EV Sector Synergies
There is thus significant interdependence in the growth rates of the renewable energy and EV sectors in India. Increasing the share of renewables in the Indian energy mix promotes a shift toward electric mobility while making it simultaneously more sustainable by bringing down the aggregate carbon footprint of EVs. In return, growth in the EV market leads to increased demand for clean energy, fostering a virtuous cycle that fuels the adoption of both technologies simultaneously.
Focus on Atmanirbhar Bharat, or self-reliant India, and the Make-in-India initiative will further strengthen synergies between these two sectors. In fact, while building up both renewable energy manufacturing and electric vehicle manufacturing in the country, India can reduce import dependence and position itself as a leader in clean energy technologies in the world.
Conclusion
According to ICRA, India is on the path to becoming a future global leader in renewable energy and electric mobility but would require investment of considerable proportions and collaboration over existing challenges. Projections for the sectors indicate massive growth opportunities for investors, manufacturers, and innovators. Renewable energy, for instance, through the manufacture of cleaner energy solutions, should be the key to sustainable development, and likewise, the same is true for the sector of EVs.
Source:
Press Information Bureau (PIB), ICRA Media Roundtable on Renewable Energy and Electric Vehicles, 21 September 2024.