A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) reveals that India will need up to $12.1 trillion in investments by 2050 to reach its emissions target. Committed to reduce carbon intensity by 45 per cent by 2030 and achieve net zero emissions by 2070, the country faces significant hurdles.
A major concern highlighted in the report is the slowdown in renewable energy capacity additions by 20. 33 per cent, from 16GWs in 2022 to 13GWs in 2023. This is despite the need to increase power generation capacity to 900GW from the current 445GW by 2031-32 to meet rising power demand exacerbated by extreme weather conditions.
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India experienced a record breaking heat wave earlier this year with the temperatures in New Delhi reaching 52 degree Celsius the highest in 60 years. This contributed to a significant increase in power demand. Although India added 16.4GW of power in the first seven months of 2023 and is projected to add a further 25GW, the annual requirement remains at 45GW, leaving a significant gap.
Public financing, a key driver for renewable energy growth, is also under pressure, according to IEEFA. Many public sector banks have already hit their lending limits in the energy sector, limiting their ability to fund new renewable energy projects.
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The Indian government is making strides to accelerate the transition to clean energy. Provisions have been made to cut customs duty on solar panels, introduce credit guarantee schemes for MSMEs, and develop a taxonomy to improve access to climate finance. Efforts are also underway to secure critical minerals from both domestic and international sources to support the transition.
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