Page 4 - AsiaElec Week 31 2021

AsiaElec COMMENTARY AsiaElec

Foreign investors express

confidence in India’s solar market

INDIA PROBLEMS with timely payments, land Corporation of India Limited (SECI), which is
acquisition, and grid access in India have not under the administrative control of the Indian
prevented foreign investors from forging invest- Ministry of New and Renewable Energy.
ment partnership with domestic independent In this way, analysts say, foreign investors may
power producers (IPPs) be able to mitigate, but not eliminate entirely the
Recent research from IHS Markit has identi- risk of untimely payments from individual state
fied sovereign wealth funds from Singapore and agencies—the purchasers of much of the renew-
Abu Dhabi, along with banks such as Goldman able capacity.
Sachs, funds such as Copenhagen Infrastructure It also appears that some of the more success-
Partners (CIP) and utilities such as Japan’s JERA ful renewable project developers in India have
major investors in solar projects led by Indian portfolios that are spread across various states,
developers. thereby allowing them to decrease their risk by
The study also said that banks such as JP avoiding putting all their eggs in one basket.
Morgan and Standard Chartered are prepared For the local renewable energy developers,
to underwrite many of the green bonds that IHS Markit said, “the promise of lower cost of
Indian power producers are floating to add to capital associated with backing from stable, for-
their renewables portfolios. eign financial institutions allows them to bid
India wants to be open to foreign investment more competitively into price-sensitive markets
as the government knows that it cannot meet its in India than competitors that rely primarily on
target of 450 GW of renewable capacity by using domestic funding sources.”
domestic capital. And as the International Energy Agency
At the G7 summit meeting in June, Indian noted in a July report on global electricity mar-
Prime Minister Narendra Modi stressed that kets, India today represents the third largest elec-
developing countries needed better access to tricity consumer in the world. Demand is set to
climate finance. grow once it resumes economic activity that the
Energy analysts agree that foreign inves- COVID-19 pandemic brought to a crawl in the
tors are drawn to India for a variety of reasons. past two years.
These include an offer of up to 100% ownership The IEEFA estimates India will need a $500bn
in any renewable project in which they have a of investment in new renewable installations to
stake, something that China doesn’t allow, plus reach its 2030 goal of 450 GW, of which roughly
a 25-year power purchase agreement (PPA), half will be in solar, 20% in wind, about 10%
secured in some instances by sovereign guar- in grid-firming technologies such as battery
antees via companies such as the Solar Energy storage, and the rest devoted to upgrading grid

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