EY-SED Fund Identifies Over 650 ‘Shovel-ready’ Low Carbon Investment

New Delhi: India’s energy transition is gaining momentum post-COVID with strong backing from policy enablers focused on improving ease of doing business, competitiveness, and self-reliant supply chains, according to an EY-SED Fund report, “Accelerating India’s clean energy transition”. EY-SED Fund Identifies Over 650 ‘Shovel-ready’ Low Carbon Investment. FICCI extended its support by launching the report at the India Energy Transition Summit.

• India added over ~15 GW of renewable power generation capacity in FY 21-22
• Approx. ~103 GW of utility-scale renewable power generation projects are in the pipeline with the potential to create ~8 lakh fresh jobs
• Approx. ~11 GW of distributed renewable power generation projects are in the pipeline with the potential to create ~96,500 fresh jobs
• Total renewable power generation projects in the pipeline would need approx INR 4 lakh crore of capital investment with the potential to avoid ~4350 million tons of CO2 emissions over their lifetime
• These projects will help achieve the right balance between economic development and energy transition goals by the Government of India.

The EY-SED Fund Low Carbon Investment report emphasizes that role of state governments will be critical in the effective adoption and implementation of policies enabling ease of doing business and competitiveness of energy transition. Rigorous planning at the state level and predictable growth in demand for clean energy sources are essential for accelerating energy transition investments.

The EY-SED Fund Low Carbon Investment report also highlights that India must build resilience against forces threatening the affordability of energy transition technologies, raw materials, and commodities used for domestic /production. Creating vertically integrated domestic supply chains can help build resilience against such forces in the long term.

Somesh Kumar, Partner and National Leader, Power & Utilities, EY India, said, “India’s energy transition may leave fossil fuel industries, communities, and workers exposed to muted or declining demand for fossil fuel commodities in the long term. Understanding and addressing the social dimensions of the energy transition is critical to ensure that fossil fuel communities are not left behind. Taking action to address the potential disparity in the economic and social outcomes from the inevitable transition can be termed as a ‘JUST’ transition. Globally, there is a growing recognition that these social considerations should form part of the policy frameworks addressing the risks and opportunities inherent in the energy transition.”

The EY-SED Fund Low Carbon Investment report further highlights that India added over ~15 GW of renewable power generation capacity in FY 21-22. Approx. ~103 GW of utility-scale renewable power generation projects and ~11 GW of distributed renewable power generation projects are in the pipeline. With the potential to create 8 lakh and 96,500 fresh jobs respectively. The report also states that total renewable power generation projects in the pipeline would need approx INR 4 lakh crore of capital investment. With the potential to avoid ~4350 million tons of CO2 emissions over their lifetime.

Somesh further added, “Solar and battery PLI schemes have demonstrated industry appetite for domestic production and could further benefit from an enhanced focus on production/recycling of critical raw materials and upstream components in the supply chain. Also, the Green Hydrogen Policy notified in Feb’22 is a timely intervention for the industry betting on its reduced cost of production. But a lot will depend on states implementing these provisions effectively.”

The EY – SED Fund report emphasizes what is at stake in terms of economic development, capital mobilization, self-reliance, jobs, and environmental sustainability from energy transition investments in the pipeline. Major market segments covered in this analysis are utility-scale renewable power generation, decentralized renewable energy (RE) power generation, and EV charging infrastructure.

Utility-scale RE power generation

Stimulus action

• Establish a national index along with regional sub-indices for RE pricing by pooling Prices/tariffs discovered from RE auctions
• Formulate a model policy for aggregation and allocation of wasteland parcels for the development of gigawatt-scale RE power parks
• Implement wholesale power market reforms, time of day pricing, and demand response frameworks to enhance flexibility for RE integration
• Implement the ‘Electricity Amendment Bill 2021’
• Enhance skilling initiatives to support the RE industry for project execution

• 360 projects
• 103GW of pipeline capacity
• INR 1.12 lakh crore equity
• INR 2.61 lakh crore debt
• 7.9 lakh fresh jobs
• 3989 MT avoided CO2 emissions

Distributed generation through rooftop PV systems

Stimulus action

• Adopt best practices from Gujarat and Kerala models of scaling up Rooftop photovoltaic (RTPV) implementation, especially in the residential sector
• Frame policy and regulatory incentives to promote utility-owned / driven business models for RTPV capacity addition
• Promote enabling mechanism for aggregation of ‘distributed energy resources to provide grid-related services
• Design and implement credit risk guarantee mechanisms to support RTPV financing for MSMEs

Project pipeline and impact

• 99 projects
• 2.0 GW of pipeline capacity
• INR 913 crore equity
• INR 2,129 crore debt
• 18,000 fresh jobs
• 80 MT avoided CO2 emissions

Distributed RE generation under PM-KUSUM

Stimulus action

• Generation-based incentives for decentralized grid-connected ground-mounted solar PV systems co-located with crops on agriculturally productive land parcels
• Dedicated financing facility for improving farmer access to low-cost debt funds. While boosting commercial viability of 1-2 MW scale ground-mounted solar PV projects on the CAPEX model

Project pipeline and impact

• 23 projects
• 8.7 GW of pipeline capacity
• INR 6,855 crore equity
• INR 1,600 crore debt
• 4.69 lakh fresh jobs
• 281 MT avoided CO2 emissions

EV charging infrastructure

Stimulus action

• Promote coupling of EV charging with low–cost renewable energy systems
• Rationalize GST on lithium-ion batteries to improve the competitiveness of energy storage services and support the emerging battery swapping industry
• Promote electric utility-driven business models for setting up EV charging Infra
• Promote smart charging, time of day pricing, demand response, and other alternate revenue levers for EV charge point operators and investors

Project pipeline and impact

• 70 projects
• 5 lakh EV stations
• INR 1.4 lakh crore investment
• 15 lakh fresh jobs