- India requires more than USD 10 trillion in clean energy investment if it is to achieve Net Zero emissions by 2070
- Renewables now account for slightly more than 46 percent of the country’s power generation.
- Notable opportunities for foreign investment include Battery Energy Storage Systems, hydrogen, offshore wind, and sector-related innovations
India will require foreign investment to achieve stated clean energy targets, including 500 gigawatts of installed energy capacity from non-fossil fuel sources by 2030 and Net Zero emissions by 2070. Understanding this, the government has made significant strides in improving the business operating environment and removing obstacles for overseas companies. Pawan Bhatnagar, Asian Insiders’ Partner in India, analyses the situation further.
At the Indo-Pacific Economic Framework for Prosperity Clean Economy Investor Forum earlier this year, Indian Commerce Secretary Sunil Barthwal proclaimed the country will provide more than USD 500 billion in clean energy investment opportunities during the next six years with renewables, green hydrogen, and electric vehicles (EVs) among the most promising sectors.
This is still only a fraction of what the country will ultimately require. A study from the CEEW Centre for Energy Finance found India needs at least USD 10 trillion in clean energy investment to achieve Net Zero emissions by 2070. The think tank noted there is a USD 3.5 trillion funding gap at present.
There is another reason for the country’s green transition push. Indian Prime Minister Narendra Modi wants to maintain the economic momentum that is being realised. It remains the world’s fastest-growing major economy and could be the third largest globally as soon as 2027.
Clean energy not only brings in investment and creates jobs but also provides a lift to other sectors, such as manufacturing, which are searching for decarbonisation options to remain competitive globally.
India’s clean energy targets & current production
India announced a commitment to reaching net zero emissions by 2070 at COP26. In the short term, the country has announced it wants to have 500 gigawatts (GW) of installed renewable energy capacity from non-fossil fuel before the decade’s end.
India reached a significant milestone in October 2024 when the Central Electricity Authority revealed that total renewable energy-based electricity generation capacity surpassed the 200 GW mark for the first time. Hitting this figure sees renewables now account for slightly more than 46 percent of the country’s power generation.
Solar is the dominant source of clean energy in India, with hydro and wind power playing critical roles as well. Here is a detailed look at renewables capacity from the Indian National Power Portal:
Solar: 90.7 GW
Wind: 47.3 GW
Large-Scale Hydro: 47 GW
Bio: 11.3 GW
Small-Scale Hydro: 5 GW
Where does India need foreign investment in clean energy?
With India now actively courting foreign investment in its bid to reach clean energy goals, many firms are looking at where the best opportunities can be found. There are a few areas where overseas businesses can have the most significant impact at the moment.
Battery Energy Storage Systems – Like many countries in Asia, India finds itself with a pressing need for Battery Energy Storage Systems (BESS). These can ensure the country can fully harness renewables and overcome supply and demand challenges related to wind and solar. As per National Electricity Plan (NEP) 2023, the BESS capacity requirement is projected to be 34.7 GWh in 2026-27, rising to more than 236 GWh in 2031-32. Furthermore, it is projected that BESS requirements will increase 1840 GWh by 2047. Partnership opportunities exist in multiple segments of the value chain, such as supply, engineering, manufacturing, engineering, and EPC.
Green hydrogen – India envisions hydrogen as a crucial component of its clean energy ambitions. In 2023, the government approved the National Green Hydrogen Mission. The key objective of the Mission is to make India a global hub for the production, usage, and export of green hydrogen and its derivatives. The aim is to build capabilities able to produce at least five million metric tonnes of green hydrogen per annum by 2030. This will open opportunities for partnerships in production, distribution, conversion, and end usage.
Offshore wind – Offshore wind potential in India could be as high as 195 GW due to the vast coastline available for future projects. Despite a claim that the country will reach 30 GW of offshore wind capacity by 2030, India does not have any projects currently online. The Ministry of New & Renewable Energy has looked to speed up efforts in recent times. It released the Strategy for Establishment of Offshore Wind Energy Projects containing development models and a timeline for tenders. A viability gap funding scheme has been approved recently including support for installing and commissioning of a 1 GW facility. Foreign firms who can solve the problems of technical complexities and supply turbines to withstand harsh sea conditions as well as provide specialised vessels can speed up the offshore wind path for India.
Floating solar – Some estimates have placed the potential capacity of floating solar in India as high as 300 GW given the existing hydropower reservoirs where this technology could potentially be deployed.
Innovations – There are many advanced technologies and innovations related to clean energy that would allow India to reduce costs further while improving reliability. For example, data monitoring of power plants and AI-driven plant optimisation are two areas somewhat lacking. Innovative add-on services are also expected to be increasingly important in the power sector.
It should be stressed these are the largest opportunities at present. Foreign firms should consider sectors not listed here if they can solve key issues or improve upon existing processes and technologies.
Understanding the clean energy business environment in India
There are many programmes and incentives related to clean energy designed to attract investment from overseas. For some time now, 100 percent foreign direct investment in renewable energy generation and distribution projects has been permitted.
The government has been proactive in reducing or removing other obstacles that would hinder efforts to scale or disincentivise overseas entities from investing. These include improving General Network Access regulations, launching the green energy corridor scheme, and the creation of Production Linked Incentive schemes.
However, international businesses must build local operational competence. India remains a market where local partnerships and teams are a necessity for success, even in a sector such as clean energy, where foreign investment is strongly encouraged at all levels.
Final thoughts
India is actively searching for foreign investment in order to meet its clean energy targets. The market is also one brimming with potential, given the size and economic trajectory of the country. Some important achievements have already been realised, such as renewables now making up 46 percent of all power generation. Yet, the journey to Net Zero is a long one, and there remain many more milestones to reach.
International businesses have a part to play in India getting there. Advanced technologies and innovations, along with assistance in critical segments like offshore wind and hydrogen, are in demand. And with several investor-friendly policies in place, entering the market now, or at least exploring the opportunity, makes sense.
Want to know more about opportunities in India currently available to foreign investment in clean energy? Asian Insiders offers unmatched experience in this space. For a no obligation call, please contact Jari Hietala, Managing Partner: jari.hietala(at)asianinsiders.com or Pawan Bhatnagar, India Partner: pawan.bhatnagar(at)asianinsiders.com