Strategic investment risks threatening India's renewable energy ambition
India has set an ambitious renewable energy target of 450 GW by 2030. Meeting the target will require $600 billion in financing for new generation and grid infrastructure, including $200 billion for PV and wind capacity. Sector financing must scale rapidly to meet this target. Mobilizing needed capi...
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| Format: | Article |
| Language: | English |
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Elsevier
2022-09-01
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| Series: | Energy Strategy Reviews |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2211467X22001158 |
| _version_ | 1798036727436148736 |
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| author | Hemi H. Gandhi Bram Hoex Brett Jason Hallam |
| author_facet | Hemi H. Gandhi Bram Hoex Brett Jason Hallam |
| author_sort | Hemi H. Gandhi |
| collection | DOAJ |
| description | India has set an ambitious renewable energy target of 450 GW by 2030. Meeting the target will require $600 billion in financing for new generation and grid infrastructure, including $200 billion for PV and wind capacity. Sector financing must scale rapidly to meet this target. Mobilizing needed capital will be difficult given the complex renewable energy (RE) sector investment risks. The goals of this paper are to: 1) guide stakeholders in systematically understanding these risks and 2) empower them with risk mitigation strategies. We complement this body of work by presenting Indian RE sector insights that have been distilled from 18 months of 40 primary research interviews with leading sector investors, independent power producers, consultants and policymakers.The work begins by overviewing India's RE progress to date and motivating a systematic understanding of sector investment risks. The power sector's political-economic structure is then explained. The financial distress of India's DisComs is emphasized along with its troubling impact on RE investments. Subsequently, nine strategic sector investment risks and corresponding mitigation strategies are discussed: project development risk, offtaker risk, stranded asset risk, volume risk, curtailment, regulatory risk, inflation, exchange rate risk, and tail risk. Offtaker risk—the most significant risk—is comprehensively discussed. Finally, we raise critical questions on evolving variables that will determine the future sector risk profile. The ideas and frameworks presented herein are also relevant to emerging markets with a similar power sector structure. |
| first_indexed | 2024-04-11T21:16:55Z |
| format | Article |
| id | doaj.art-a26ed33c422b4ec6b8c4df7ec2e72c45 |
| institution | Directory Open Access Journal |
| issn | 2211-467X |
| language | English |
| last_indexed | 2024-04-11T21:16:55Z |
| publishDate | 2022-09-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Energy Strategy Reviews |
| spelling | doaj.art-a26ed33c422b4ec6b8c4df7ec2e72c452022-12-22T04:02:47ZengElsevierEnergy Strategy Reviews2211-467X2022-09-0143100921Strategic investment risks threatening India's renewable energy ambitionHemi H. Gandhi0Bram Hoex1Brett Jason Hallam2School of Photovoltaic and Renewable Energy Engineering, University of New South Wales, Kensington, New South Wales, Australia; Harvard John A. Paulson School of Engineering and Applied Sciences, Cambridge, MA, USA; Corresponding author. Creative Synergies Group, USA.School of Photovoltaic and Renewable Energy Engineering, University of New South Wales, Kensington, New South Wales, AustraliaSchool of Photovoltaic and Renewable Energy Engineering, University of New South Wales, Kensington, New South Wales, Australia; Corresponding author.India has set an ambitious renewable energy target of 450 GW by 2030. Meeting the target will require $600 billion in financing for new generation and grid infrastructure, including $200 billion for PV and wind capacity. Sector financing must scale rapidly to meet this target. Mobilizing needed capital will be difficult given the complex renewable energy (RE) sector investment risks. The goals of this paper are to: 1) guide stakeholders in systematically understanding these risks and 2) empower them with risk mitigation strategies. We complement this body of work by presenting Indian RE sector insights that have been distilled from 18 months of 40 primary research interviews with leading sector investors, independent power producers, consultants and policymakers.The work begins by overviewing India's RE progress to date and motivating a systematic understanding of sector investment risks. The power sector's political-economic structure is then explained. The financial distress of India's DisComs is emphasized along with its troubling impact on RE investments. Subsequently, nine strategic sector investment risks and corresponding mitigation strategies are discussed: project development risk, offtaker risk, stranded asset risk, volume risk, curtailment, regulatory risk, inflation, exchange rate risk, and tail risk. Offtaker risk—the most significant risk—is comprehensively discussed. Finally, we raise critical questions on evolving variables that will determine the future sector risk profile. The ideas and frameworks presented herein are also relevant to emerging markets with a similar power sector structure.http://www.sciencedirect.com/science/article/pii/S2211467X22001158IndiaRenewable energyInvestment riskInvestment risk mitigation strategiesEnergy transition |
| spellingShingle | Hemi H. Gandhi Bram Hoex Brett Jason Hallam Strategic investment risks threatening India's renewable energy ambition Energy Strategy Reviews India Renewable energy Investment risk Investment risk mitigation strategies Energy transition |
| title | Strategic investment risks threatening India's renewable energy ambition |
| title_full | Strategic investment risks threatening India's renewable energy ambition |
| title_fullStr | Strategic investment risks threatening India's renewable energy ambition |
| title_full_unstemmed | Strategic investment risks threatening India's renewable energy ambition |
| title_short | Strategic investment risks threatening India's renewable energy ambition |
| title_sort | strategic investment risks threatening india s renewable energy ambition |
| topic | India Renewable energy Investment risk Investment risk mitigation strategies Energy transition |
| url | http://www.sciencedirect.com/science/article/pii/S2211467X22001158 |
| work_keys_str_mv | AT hemihgandhi strategicinvestmentrisksthreateningindiasrenewableenergyambition AT bramhoex strategicinvestmentrisksthreateningindiasrenewableenergyambition AT brettjasonhallam strategicinvestmentrisksthreateningindiasrenewableenergyambition |