Moody’s Ratings has released a comprehensive analysis outlining the trajectory of investment in India’s power sector, emphasizing a significant shift towards renewable energy initiatives.
According to the report, India’s power sector investments are poised to be predominantly driven by renewable energy and transmission projects, necessitating an estimated investment of $340-385 billion to achieve the government’s ambitious targets. With India setting a target of achieving 500GW of renewable energy capacity by 2030, the report underscores the need for substantial investment, estimating an annual capacity addition of approximately 44 GW. To meet these targets, an investment ranging from $190 billion to $215 billion over the next seven years will be required, primarily directed towards renewable energy projects. Furthermore, Moody’s highlights the necessity of an additional $150-170 billion investment for electricity transmission and distribution infrastructure, as well as energy storage systems to accommodate the incremental renewable energy capacity.
While acknowledging the robust growth momentum in renewable energy capacity, Moody’s underscores the continued significance of coal-based power generation in India’s energy landscape. Despite the substantial expansion in renewable energy capacity, coal-based units are expected to remain pivotal in power generation for the next 8-10 years, mitigating risks associated with stranding coal-based power assets. The report forecasts the addition of 40-50 GW of coal-based capacity over the next five to six years to meet the escalating power demand, projected to grow by 5%-6% annually. Despite this, the utilization rate for coal-based capacity is anticipated to remain high at around 65%-70%, underscoring the enduring importance of coal in India’s energy mix.
Moody’s also highlights the crucial role of stable regulations and policy frameworks in supporting power companies’ transition towards carbon neutrality. The agency applauds India’s progress in increasing the share of renewable energy in its power capacity mix, attributing it to strong policy support. Continued policy backing is deemed essential for India to make significant strides towards its 2030 transition targets and 2070 net-zero objectives. Moody’s underscores the pivotal role of renewable energy while acknowledging the persistent significance of coal-based power generation in India’s energy transition journey. With stable regulations and policy support, India is poised to navigate towards a greener and more sustainable energy future.
