Chennai: Interest to invest in the Indian renewable energy sector remains strong, according to a new report on India’s Clean Energy Investment Trends by the CEEW Centre for Energy Finance (CEEW-CEF) and the International Energy Agency (IEA).
A statement said15.3 GW solar PV (including solar-wind hybrid) was sanctioned in competitive tenders in the first half of 2020 overall, comparable to the capacity sanctioned over the full year 2019. This was driven in large part by the exercise of an option in June 2020 by two developers to expand allocations under SECI’s manufacturing-linked tender, capacities under which were initially awarded in December 2019. However, equity investor returns expectations rose from around 14 per cent in the first half of 2019 to 16-17 per cent over the second half of 2019 and the first half of 2020.
The higher risk returns expectations are a reflection of heightened risk perceptions stemming from policy and market uncertainty over potential contract renegotiation by off-takers and the potential imposition or extension of duties on solar PV imports, further exacerbated by supply chain uncertainties caused by COVID-19 and delays in the signing of power purchase agreements (PPA) in 2020.
Arjun Dutt, associate at the CEEW-CEF, said, “the robust market activity in the first half of 2020, including the participation of a few first-time investors, indicates that India’s renewable energy sector represents an attractive and resilient investment destination overall. Addressing persistent risks relating to discom financial weakness, the timely availability of land and evacuation infrastructure, coupled with recently heightened concerns over sanctity of contracts and uncertainty surrounding impending trade barriers are essential for unlocking low-cost capital flows at scale.”