India’s renewable energy sector can expect 35 percent growth in investments by 2023 – Crisil

Increasing global investor interest and an enabling regulatory ecosystem has primed India’s renewable energy (RE) sector to attract 35 percent growth in investments by the financial year 2023.

According to CRISIL Rating’s analysis estimates that India can augment as much as 35 gigawatts (GW) of renewable energy in both solar and wind power capacity in the next three years through fiscal 2023.

It translates to a 35 percent increase over the Rs 1.1 lakh crore invested in the past three fiscals.

In India, a push towards clean energy is driving the global investor interest as has been witnessed in project tenders getting oversubscribed amid strong participation by global investors.

“Global investments have risen from around 15 percent of total capital investment in fiscal 2015-18 to around 50 percent of total investments in fiscal 2018-20. Going forward, the global investments and internal accruals can easily generate around half of the Rs 1.5 lakh crore investments required,” said Hetal Gandhi, Director, CRISIL Research.

The report also highlights investor confidence also stems from the sustained empowering regulations which include removal of tariff caps, consistent regulatory policies, and rising renewable energy targets.

Even during the lockdown due to the coronavirus pandemic, the ‘must-run’ status of projects had ensured continuous project off-take despite weak demand.

Further, aiding the process was the support given to project developers in the form of extensions to under-construction projects. This helped with mobility constraints, supply hurdles, and labour shortages.

However, a sagging economy and a weak financial sector may pose challenges to fund the credit requirement for the slated growth of the RE sector.

“But with a growing scale, the sector will churn out around 18 GW of the fresh stabilized portfolio with top developers over the next three years that are amenable to refinancing. This means an aggregate debt capital of Rs 70,000 crore can be freed up to fund greenfield capacities,” says Ankit Hakhu, Director, CRISIL Ratings in a press note.

What supports this refinancing is a positive credit bias due to improving confidence in the performance of solar, which actually constitutes over three-fourths of the target pool.

Positive credit bias

CRISIL’s recent study is based on power generation across 75 solar projects (with a track record of more than three years) which indicate that 80 percent of the time, the performance has been better than estimation.

Lower generation of power for the rest was largely due to sporadic and curable operation and maintenance issues rather than module degradation, implying greater confidence in the performance of modules.

The risks related to delayed payments from state discoms have also been better managed by leading developers through liquidity buffers. Their project diversity also reduces exposure to a single site or counterparty related risks.

Platforms such as infrastructure investment trusts which have superior governance mechanisms and beneficial tax structures have also opened up avenues for fresh investments from global funds that are scouting for green investments. This, too, can free up developers’ equity capital for growth.

CRISIL’s analysis counts on continued investor thrust and an enabling regulatory environment to double the capacity-addition run-rate from the 6-8 GW projects set up annually in the past 3 fiscals.

Shampa Bahadur has been a business journalist for more than two decades. She has written for Business India, PTI Media TransAsia and India Infrastructure Publication Ltd among others. She has also written coffee table books. She can be reached at

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