New Delhi
According to a report by the Center for Financial Accountability, project finance flows into renewable energy projects have recorded a 63 percent increase in 2023 compared to 2022, touching Rs 30,255 crore ($3.66 billion).
Increase in project finance lending
The report titled ‘Coal versus renewable energy investment in 2024’ said that project finance lending to renewable energy projects has increased, but no finance lending was given to new coal power projects for the third consecutive year. However, corporate finance lending to coal power and mining companies totaled $3 billion.
Solar power projects dominate renewable energy deals
Renewable energy deals in 2023 were dominated by solar power projects, accounting for 49 percent of total deals, followed by hybrid projects at 46 percent and wind energy at 6 percent. “We have seen steady growth in project finance for solar and wind power projects,” said Joe Athiyali, executive director of the Center for Financial Accountability. This shows that investors have confidence in renewable power projects.”
In 2023, more than 96 percent of coal-linked company finance in India was from commercial banks through underwriting, while the remaining 4 percent was from loans. US-based banks provided corporate financing to coal-linked companies, contributing 65 percent of the total.
Commercial banks provided 68 percent of renewable energy loans
The report said India has achieved 188 GW of non-fossil fuel capacity by 2023. The report said primary financing accounted for 77 percent of project deals while refinancing contributed the remaining 23 percent. Commercial banks provided 68 percent of renewable energy loans, totaling Rs 20,625 crore ($2,497 million).
State-wise data shows Gujarat received 25 per cent of the finance capacity, amounting to Rs 9,857 crore ($1,193 million), followed by Karnataka with Rs 4,593 crore ($556 million). Union Minister Pralhad Joshi earlier this week It was said that India has added about 15 gigawatts of renewable energy capacity during April-November in the current financial year, which is more than 15 gigawatts in the last year. This is almost double the 7.54 GW added during the same period.
An increase of more than 14 percent compared to last year
Addressing the CII International Energy Conference and Exhibition (IECE) here, the Renewable Energy Minister further said that India’s total installed capacity in the non-fossil fuel energy sector has reached 214 GW as compared to the same period last year. Shows an increase of more than 14 percent.
Additionally, he noted that 2.3 GW of new capacity was added in November 2024 alone, representing a four-fold increase compared to the 566 MW added in November 2023. Union Minister Joshi reiterated the government’s commitment to achieve 500 GW of non-fossil fuel based capacity by 2030.
5 percent increase from 2032
The country’s energy storage scenario is developing rapidly. The proportion of renewable energy projects incorporating storage solutions is increasing significantly, from 5 per cent in FY20 to 23 per cent in FY24.
By FY32, the share of variable renewable energy (VRE) in power generation is expected to triple, raising concerns about grid stability. The increase of VRE can destabilize the grid unless there are significant changes to the power system. Especially with the integration of energy storage systems (ESS), which are important in this management.
The real challenge is due to the ongoing mismatch between VRE production and maximum power demand. This mismatch often leads to grid instability, surplus energy during peak production hours, and continued dependence on fossil fuels during non-solar periods.
ESS provides a solution by storing excess renewable energy during peak generation periods and releasing it at peak demand, thereby stabilizing the grid and reducing problems such as supply and demand differences during the day (Diurnal Duck Curve). .
BESS capacity will increase 375 times
Battery energy storage systems (BESS) and pumped storage projects (PSP) are expected to dominate the energy storage market, with BESS in particular emerging as the dominant technology due to its spatial flexibility, quick response time, and technology improvements. , which is further reducing the cost.
By FY32, BESS capacity is expected to increase 375 times to 42 GW, while PSP capacity will increase four times to 19 GW.
Opportunity to invest Rs 3.5 lakh crore in BESS
Currently, about 80 percent of the cost of BESS comes from battery cells and related components, most of which come from China. This will help India reduce its dependence on imports and strengthen its battery ecosystem. Major players are already investing heavily in battery manufacturing and component production, with approximately 120 GWh of cell capacity announced, although more investment will be required to meet projected demand.
Funding potential is critical for the BESS ecosystem, with an estimated opportunity of Rs 3.5 lakh crore by FY32, driven by a combination of project-level investment and upstream manufacturing growth. PSPs are facing slow growth due to their long gestation period, yet are expected to contribute investment of Rs 1.2 trillion by FY32.
