Rising clean energy investments and an expanding offshore wind sector are pointing toward a new renewable energy boom in India, as the falling cost of clean technologies paired with the global energy crisis siphons investment away from fossil fuels.
“The Russia-Ukraine war has driven up the prices of imported coal and gas and is adding strain to the dispatchability of high-cost power,” writes energy economist Vibhuti Garg for the Institute for Energy Economics and Financial Analysis (IEEFA).
“Renewable energy combined with energy storage systems such as battery storage and pumped hydro have become a cheaper source of electricity to meet electricity demand round the clock.”
That shift “will actually hasten the energy transition,” India’s Power and Renewable Energy Minister Raj Kumar Singh told Bloomberg Green. “Once you have round-the-clock renewables, that’s renewables plus storage, that are viable, then that’s the end of the story for fossil fuels.”
A report released by Garg in June showed a record US$14.5 billion in renewable energy investment in India for the 2021-22 fiscal year—a rise of 125% from the year before, and a 72% increase from pre-pandemic levels. Acquisitions accounted for 42% of total investments, and most of the other big deals were packaged as bonds, debt, joint ventures, equity investment, and mezzanine funding—a hybrid of debt and equity financing. General renewable energy accounted for 54% of the investments and solar comprised 42%. The remaining money was directed to rooftop solar (2%), green energy finance (1%), and wind (1%).
Garg expects renewables to maintain their current growth trend in India, but she says government action is necessary to decarbonize “hard-to-abate sectors” like fertilizer production and petroleum refining, where green hydrogen consumption could be accelerated. The government could also hasten growth in key areas like energy storage by setting time-based targets.
Garg adds that India’s ministry of renewable energy has revived its 2015 offshore wind power goals with a roadmap to install 30 gigawatts by 2030.
“With offshore project costs falling globally, it’s the right time for this move,” she writes.
Globally, offshore wind is emerging as a new and viable clean energy solution. China alone installed 16.9 gigawatts of new capacity in 2021, amounting to 30% of the global total. So far, the high cost of offshore wind compared to onshore wind and solar has held back progress in India, says the Financial Express.
But offshore turbines will play an important part in decarbonizing India’s power sector, managing peak demand, and adding resource diversification benefits. As offshore wind emerges as a viable energy source worldwide, successful development of other renewable energy projects in India would give investors confidence to invest more to expand the sector. Rising investment in offshore wind would, in turn, help the country sustainably address its rising electricity demand.
“Even with higher tariffs today, offshore wind power provides energy security against shocks from the price volatility of fossil fuels,” the Financial Express writes.