New Delhi: India needs to invest about Rs 2.6 lakh crore between now and December 2022 in order to meet the target of 175 gigawatt (GW) of renewable energy capacity, according to data shared by the Ministry of New and Renewable Energy (MNRE) with the Parliamentary Standing Committee on Energy.

That, however, means the country would have to increase its annual spend on renewable energy projects to about Rs 1.3 lakh crore in each of the two calendar years 2021 and 2022. This is a far cry from the average annual investment of Rs 82,300 crore done in the past five years, as informed by the ministry to the panel.

The investment in India’s RE sector in the past five years
The investment in India’s RE sector in the past five years

Meeting 175-GW renewable energy target: Why India needs to pull up efforts
Sources: Lok Sabha report by standing committee on energy, Bloomberg New Energy Finance Research

The committee’s report titled ‘Action plan for achievement of 175 GW RE target’ was tabled in Parliament earlier this month. To achieve the target of 175 GW from present, India needs funding for the remaining balance of 58 GW only — as the current installed capacity is 87 GW and about 30 GW is under implementation.

“Requirement of funds for 58 GW capacity would be about Rs 2,61,000 crore — at Rs 4.5 crore per megawatt rate — which is Rs 1,82,700 crore in debt finance and Rs 78,300 crore in equity finance during next two to three years,” the ministry told the panel. However, it added that further cost reduction for wind and solar power technologies over the years was expected.

Foreign investment attracted so far in the renewable energy sector
Foreign investment attracted so far in the renewable energy sector

Meeting 175-GW renewable energy target: Why India needs to pull up efforts
Sources: Lok Sabha report by standing committee on energy, ministry of new and renewable energy

According to the report, the Indian Renewable Energy Development Agency (IREDA) being the only public sector financial institution for financing of RE projects, must gear itself up to take on the extra responsibility and provide capital for installation of renewable energy projects.

“The committee, therefore, recommend that the ministry should mobilise more long-term financing and concessional loans through multilateral and bilateral agencies as far as possible,” it said.

Out of 88 GW of installed renewable power projects as of June 2020, IREDA financed 229 projects of 11,830.69 MW with a loan amount of Rs 25,922.60 crore, according to the report.

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