Renewable energy financing and its significance for climate targets

Abstract

Building on the NDC commitments of Paris Agreement, Prime Minister of India anounced revised targets in November 2021 at COP 26 held at Gasslow. The announcements of 500 GW non-fossil installed capacity by 2030 and 50% of total installed capacity to be sourced from non-fossil sources by 2030 came as a pleasant surprise to many. The PM also set the date for Net Zero transition of India to be 2070. On analysing the energy transition trends in India over the past 7 years(from Paris Climate Agreement of 2015), we observed a commendable achievement of 25% increase in renewable capacity installation and reaching of NDC goal of 40% non-fossil based capacity well ahead of time. However, with total current non-fossil capacity of 157 GW(Nov 2021), the target of 500 GW by 2030 seems to be very aspirational. This would require additional non-fossil capacity installation of around 343 GW in the next 8 years, i.e, more than 35-40 GW capacity addition annually. On exploring the various challenges towards achieving the target, the key challenges emerged from the non-fossil capacity addition amidst various constraints including supply chain challenges of solar PV modules of which around 80-85% is currently imported from China, expansion and stability of grid capacity, battery energy storage systems(BESS) and some socio-economic challenges arising from the energy transition. The report concludes that achievement of such an aspirational target would be rare feat, especially in the absence of strong financial and technology transfer commitments by developed nations, which were outlined in the PM’s Glasgow statement as well.