India Is the Fastest Growing Energy Market

A couple of months ago, I wrote a blog on how renewables are taking center stage in India’s energy future. I mentioned that clean energy policy support, positive investment sentiments, regulatory measures, and Conference of the Parties commitments are set to help transition India’s position as a top contributor to growth in the global clean energy sector.

Therefore, it came as no surprise when the recent World Energy Investment (WEI) report by the International Energy Agency stated that India is now the fastest growing energy market in the world with an investment growth rate of 12% in 2018 in the energy sector, the highest growth rate globally. Global investment in energy accounted for $1.8 trillion in 2018, broadly similar to levels reported in 2017, while investments in renewables reportedly slowed across world markets. In India, however, total renewable power investment topped fossil fuel-based power, driven by tendering and uncertain financial prospects for new coal power.

What Is Happening in the Indian Market?

According to the WEI, India’s ambitious renewable capacity expansion plans are bearing results; WEI has stated: "In 2018, renewable spending continued to exceed that for fossil fuel-based power, supported by tendering for solar PV, and from 2017 wind, amid uncertain financial attractiveness of new coal power, though spending in coal supply rose somewhat. While transmission spending is expanding, investment in distribution has not grown."

India is the third-largest energy consumer in the world. Despite reliance on fossil fueled generation, the country has set ambitious targets and built supportive infrastructure to promote clean energy through its Renewable Portfolio Obligation Act. Investments in solar PV alone exceeded that for coal plants. Even though India is probably one of the largest markets for coal-fired power and this dependency is likely to continue, there is a government mandate for coal plants to generate or contract power from renewable sources. Depletion of fossil resources and coal shortages in the region has created a strong business case to substitute clean energy resources in the country. Use of renewables in place of coal is estimated to save India Rs 54,000 crore ($8.43 billion) annually.

A Sturdy Foundation

India’s focus on energy efficiency along with its growth in clean energy investment is no longer driven by market sentiments but instead is based on a strong foundation of both policies and economics. Various policy support and initiatives run by the current government, such as Make in India and Perform, Achieve, Trade, have triggered industrial growth in the country. Energy will play a crucial role in achieving these initiatives. There is no denying that renewable energy will be a key driver in putting India on the global energy stage.