Page 5 - AsiaElec Week 04 2021

AsiaElec COMMENTARY AsiaElec

Foreign investment
Foreign investors are beginning to sit up and take between the government and the International
notice of the country’s potential and the govern- Energy Agency (IEA).
ment’s commitment to green energy. As India is not yet a member of the club of
Even in the short term, the government aims the largest energy consumers, the deal does allow
to double renewable capacity over the next year considerable co-operation in areas from energy
to 175 GW, and to expand it to 450 GW by 2030. security and clean energy transitions.
Prime Minister said in 2019 that India wanted “India will have a critical role in shaping the
investment in renewables to reach $20bn per world’s energy and climate future. As the leading
year in the next decade, with the sector opening global authority on clean energy transitions, the
up to foreign private capital. IEA is the perfect partner to support India as it
Total last week paid $2.5bn to buy control of expands and improves its energy system for the
Adani Green Energy, the country’s largest green benefit of its 1.4bn citizens,” said Fatih Birol, IEA
generator. Executive Director.
Modi’s support for foreign investment comes India is also planning its coronavirus
as the country’s coal-dominated power sector (COVID-19) recovery priorities. COVID-19
offers fewer attractions. Both generators and has had a substantial impact on India’s electric-
state-owned distribution companies are mired ity system.
in debt, while many power plants are operating As power demand has fallen since March
at well below capacity because of problems with 2020, renewable energy generation has played a
coal and gas supplies. Some distributors have larger role in the electricity mix, while the tradi-
reneged on power purchase contracts, as they tional coal-fired power has stalled. Coal’s share
leave them heavily in debt. of generation fell from 81% before the March
With power consumption now at low levels 2020 lockdown to 73% in April 2020.
in comparison to developed countries, reflected Nevertheless, the commitment to renewables
by the low per capita emissions data, India offers must be accompanied by improvements to cre-
considerable demand growth at a time when ate a more transparently efficient power sector.
developed economies are showing little sus- This includes tariff reform to reduce subsidies
tained growth prospects in power consumption. and make them more cost-reflective in a bid to
improve the long-term solvency of many compa-
nies across the value chain.
Strategic partnership Also, a wholesale market in power must be
Other good news for India’s power sector developed to integrate the new generation of
includes a strategic partnership signed this week solar and wind with the national grid. ™

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