Certain risks with regard to investment in green energy in India are based on the obligations around contracts being breached, and regulatory stability will attract higher investment into the sector, said Deep Gupta, MD, Macquarie Asset Management.
Speaking at the panel discussion on the green economy during the Mint India Investment Summit on Tuesday, Gupta said he expects a lot of capital to flow into a green economy as India is driving a lot of innovation globally.
“Some of the risks that we see today are based on obligations around the contracts being breached and not enough thought goes into what obligations would be in the future. I look into the road sector and there you see that over a period of time the concession framework coming to a level that is a lot more bankable," Gupta said, adding that India has a fair judicial process in place which could be followed more swiftly.
Kavita Saha, MD, Infrastructure, India CPP Investments said the size and scope of investments in green energy have changed over the years.
“I still remember a time in 2006 advising a project which had 120 megawatts which was probably the largest renewable power facility in the country. And now you are talking about hundreds of gigawatt-scale projects. The problem still continues to remain, to some extent is that of the financial health of the Discoms who are ultimately the counterparties to most of these projects. But the problem has been recognised to an extent," Saha said.
The emphasis on the green economy gained momentum amid covid-19 and the Indian government also has sounded bullish on the issue. Prime Minister Narendra Modi's commitment at COP-26 Summit in Glasgow last November, that India would achieve net-zero carbon emission by 2070 has brought about further urgency on the policy front in terms of turning towards a greener and environment-friendly resources.
The Union Budget for FY23 also laid down an outline for the government's focus on green and circular economy. Presenting the budget last month, Finance Minister Nirmala Sitharaman had said: "We will promote a shift to the use of public transport in urban areas. This will be complemented by clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles."
She also announced that the government will come up with a batter swap policy and interoperability standards and the private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’.
In terms of solar energy, the budget allocated an additional amount of ₹19,500 crore for PLI for manufacturing high-efficiency modules with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.
Among other measures, the finance minister had also announced that four pilot projects for coal gasification and conversion of coal into chemicals required for the industry will be set up to evolve technical and financial viability.
