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Equities, Markets - February 26, 2025

Adani, Ambani to invest Rs. 50,000 Cr. in Assam

Adani, Ambani to invest Rs. 50,000 Cr. in Assam

 

Overview

At the Advantage Assam 2.0 Summit, Adani and Reliance Industries each pledged to spend Rs 50,000 crore in Assam. Among other projects, Mukesh Ambani revealed plans for an Al-ready Data Center. The Adani Group will invest in a number of areas, such as renewable energy and infrastructure. JSW and Tata are also expected to make large investments in the state.

 

Huge investment promises

Advantage Assam 2.0 Investment & Infrastructure Summit 2025 got underway in Guwahati on Tuesday with Reliance Industries Limited and the Adani Group having pledged to invest Rs 50,000 crore and Rs 50,000 crore, respectively. Speaking at the event, Reliance Industries Limited Chairman Mukesh Ambani stated that AI would refer to both Assam intelligence and artificial intelligence. In 2018, during the last summit, Reliance pledged to invest Rs 5,000 crores in Assam. We have since invested more than Rs 12,000 crore in the state. In the next five years, Reliance plans to more than treble its investment in Assam to over Rs 50,000 crore in the five priority areas listed below.

 

Ambani to set up Data Centres

Mukesh Ambani underlined Reliance’s intent to make Assam “Tech-Ready and AI-Ready” as part of its digital transformation vision. An AI-ready Data Center may be built in Assam which would apply AI assisted teachers to improve education, AI assisted doctors to better healthcare, and AI assisted farmers for agriculture. Assam will enable its youth to learn and earn from home. Furthermore, Reliance will help Assam become a leader in clean atom and green energy, adopting the government’s nuclear policy for the participation of the private sector.

 

RIL’s 5 schemes for development

Mukesh Ambani provided five grand schemes for development of Assam’s economy. Reliance is set to construct two world class Compressed Biogas (CBG) facilities on reclaimed wasteland, and are expected to produce 8 lakh tonnes of clean biogas yearly that could power 2 lakh passenger automobiles daily. New Mega Food Park in Assam would enable it to become a key supplier of food and non-food agro based consumer goods at the national and international level by increasing the value chain of the local produce. Within five years, Reliance Retail is set to double its stores in Assam from 400 to 800. To further develop Assam’s tourism and hospitality sector, Reliance plans to build a seven star luxurious Oberoi hotel. These measures are sure to provide a wealth of direct and indirect employment opportunities for the youth.

 

Adani targets infrastructure

Gautam Adani, Chief of the Adani Group, made a landmark investment of ₹50,000 crore in Assam. These investments will target major infrastructure domains such as airports, ports, city gas distribution, power transmission, cement making, and road development. They are meant to drive the growth of Assam’s economy, increase connectivity, and enhance the distribution of energy.

 

Tata Sons’ pledge for renewable power

N Chandrasekaran, Chairman at Tata Sons, also delineated the development ambitions of the Tata Group for Assam. The corporation will set up 5GW of renewable power in the state within the next five years and help India in its green energy mission and in curbing carbon emissions. Apart from this, the Tata Group will also make an investment in a mega project of large-scale manufacturing technology that will provide jobs for 30,000 youngsters. The venture will help drive Assam’s industrialization, provide skilled jobs, and reinforce the local economy.

 

Other major investments in Assam

Sajjan Jindal, JSW Group Chairman and MD, announced investments in Assam’s renewable energy sector. Further, Anil Kumar Chalamalasetty, MD of Greenko Group, announced that the company will be investing ₹10,000 crore in two Assam units. Greenko is already working with Numaligarh Refinery Limited on ongoing projects.

 

Vedanta Group subsidiary Cairn Oil & Gas invested ₹50,000 crore in oil and gas exploration and production in the region. Vedanta Group Chairman Anil Agarwal informed that the company has three locations in Assam and Tripura and will set up world-class oil and gas exploration and production (E&P) facilities in Assam. The potential of the state to emerge as a Mega basin of the world and an energy production center of the country was highlighted. Vedanta is going to invest more than ₹50,000 crore in Assam to produce 100,000 barrels of oil and gas per day. This project will create world-class exploration and production (E&P) facilities and provide direct and indirect employment to 1 lakh youth, strengthening the position of Assam as a power player in India’s energy sector.

 

Conclusion

The Advantage Assam 2.0 Summit attracted big-ticket investments with Reliance and Adani committing ₹50,000 crore each for AI, clean energy, and infrastructure. Tata, JSW, Greenko, and Vedanta also committed to renewable power, oil and gas, and manufacturing. The investments make Assam a pioneering center for innovation, energy, and industrial development, with thousands of jobs being created.

 

 

 

 

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Easing of risk weights on loans given to MFIs and NBFCs

 

 

 

 

 

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures
Equities, Markets - January 30, 2025

Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

Overview
The renewable energy sector anticipates that Finance Minister Nirmala Sitharaman would announce more steps to encourage the production of local equipment, policies to encourage the adoption of green technologies, increased funding for renewables, and a duty differential to assist domestic companies.

Over the past two years, the fiscal support for the renewable energy sector has more than doubled. Compared to the revised budget estimate of ₹7,848 crore for FY 2023-24, the Ministry of New and Renewable Energy’s (MNRE) total allocation for FY 2024-25 climbed to ₹19,100 crore.

As India strives to reach 500 GW of green energy capacity by 2030, the Union Budget 2025–26, which will be unveiled on February 1, is anticipated to include a number of incentives for the renewable energy industry. The renewable energy sector in India is optimistic that the next Union Budget will provide a path for the fossil fuel-dependent economy to increase its green energy capacity in multiple ways, given recent geopolitical developments such as China’s export restrictions and the United States’ tougher sanctions on Russian oil.

Large budget allocation through PLI Schemes
Green energy stakeholders want a stronger domestic push, whether it is for output, storage capacity, new production-linked incentive (PLI) schemes with larger budget allocations for areas like battery infrastructure, or research and development promotion. This is especially important at a time when India may find it difficult to meet its 2030 target of 500 GW from non-fossil fuel sources.

According to Subburathinam P, Chief Operating Officer of TeamLease Services, many businesses in these industries are still in the pre-production or incubation stage. It is crucial that they enter the production stage in order to benefit from PLIs in the renewable energy industry. The industry anticipates a drive toward battery storage, which is essential for integrating renewable energy and guaranteeing a steady power supply.

Industry participants look for ways to solve implementation issues and encourage domestic production in new and developing renewable technology areas. To reduce reliance on imports, primarily from China, the government may propose support measures for the domestic battery manufacturing and supply chain.

PSUs in action
In order to meet the 2030 target and become Net Zero by 2070, more steps are anticipated to increase the involvement of corporate and public sector undertakings (PSUs) in the green energy transition. Given that these technologies have large capital expenditures and a ten to fifteen-year time horizon, a significant rise in resource allocation is anticipated for the adoption of renewable energy, the integration of green technologies, and waste reduction.

Solar Cells to be supported by incentives
Observers of the green energy sector believe that more incentives to support domestic production of solar cells and green hydrogen would be included in the Union Budget 2025. In order to increase research and development (R&D) activities in the industry and draw in foreign money, supporting measures can be proposed.

As the nation seeks to diversify its renewable energy portfolio, larger solar and offshore wind projects are probably going to receive larger budgetary allocations. In a similar vein, increased funding is anticipated for carbon markets, green hydrogen production, and future technologies.

Support for minerals
The government may focus on critical minerals such as lithium, copper, cobalt, and rare earth materials, which are vital for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.

In the last budget, the government fully exempted customs duties on 25 critical minerals and reduced basic customs duties (BCD) on two of them to boost the processing and refining of such minerals. Any further friendly measures in this direction will ensure the easy availability of such critical minerals for renewable energy players.

Boosting the Green Sector
In order to encourage the public to embrace green energy, the government introduced legislative initiatives like the PM Surya Ghar Muft Bijli Yojana in the most recent Budget. In order to provide free electricity to one crore families, up to 300 units per month, the Yojana was started to install rooftop solar plants.

Last year, the increase of energy capacity in the renewable energy industry significantly improved. In the calendar year 2024, 27 GW of renewable energy capacity was added. In November 2024, the total installed non-fossil fuel capacity was 214 GW, a 14% increase over the 187.05 GW recorded during the same period the previous year. Of this, 47.96 GW came from wind energy and 94.17 GW from solar energy.

Ahead of the Union Budget 2025, pressure has continued to mount on leading renewable energy equities. Compared to their closing price on the NSE on January 1, the shares of major industry companies, including Waaree Energies, KPI Green Energy, NTPC Green, and Adani Green Energy, have dropped by as much as 60% since the start of the month.

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India’s export in auto industry reach 19 percent

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Private Equity Firm Acquires ISO Solar to Accelerate Clean Energy Growth in Puerto Rico
Business, Equities, Markets - January 15, 2025

Addition of 2 more payment methods for Rooftop Solar Installation

Addition of 2 more payment methods for Rooftop Solar Installation

The Indian Ministry of New and Renewable Energy Ministry of India has announced new guidelines in terms of payment methods for installation of solar panels on rooftop projects. The new guidelines approve two more payment methods. These guidelines are approved in context of PM Surya Ghar: Muft Bijli Yojana

PM Surya Ghar: Muft Bijli Yojana
On 19th February, 2024, the scheme was approved in the Union Cabinet. The goal of the scheme was to install solar panels on rooftops in one crore households all over India and provide about 300 units of free electricity per month. Its aim is to protect the environment by reducing 720 million tonnes of CO2 emissions in the next 25 years. Its objective is to add around 30 GW of solar capacity throughout India.

New Guidelines
To guarantee payment security in the transaction process, two more payment methods were added. It is also to ensure that the subsidy is granted to the households opting for payments through Utility-led aggregation (ULA) models and Renewable Energy Service Company.

The renewable ministry’s guidelines under the PM-Surya Ghar: Muft Bijli Yojana is to implement components such as Central Financial Assistance and Payment Security Mechanism. These components are going to be implemented to ensure smooth function of RESCO models or the utility-led aggregation models. Its purpose is to ensure that benefits from subsidies are reaching individuals. It also undertakes the responsibility of the safe installation process of solar panels.

At present, around 100 crore are reserved for the payment security mechanism purpose. It is to ensure that investments in the RESCO-model will be safe and more secure. Apart from Rs. 100 crore of funds, more funds and grants will be approved for the investment in the RESCO model in the future to support investment in this model.

About the RESCO and ULA model
The RESCO model refers to third party firms making investments in the installation of rooftop solar systems. In this model, consumers of electricity usage have to only pay for the electricity consumed by his household and not have to pay for other charges associated with the installments. The consumer pays charges to the RESCO which is lower compared to conventional electricity charges.

The ULA model refers to the power utility firms or state designated firms who install rooftop solar systems in place of individual households.

Purpose
Both ULA and RESCO models give households an opportunity to install solar systems with no cost. Its primary aim is to provide homeowners access to clean electricity as well as make it affordable for them. It also aims to achieve broader elimination of financial barriers.

The renewable ministry further cleared that these new guidelines are the supplement to the existing model. The consumer can use the existing method known as capex mode for installation of rooftop solar systems. The consumers can use the existing method by visiting the national portal for applying and managing installment of rooftop solar systems.

These two additional payment models will work alongside the existing method to give more options for the consumers in terms of affordability as well as security.

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Railway Sector’s Budget Allocation and Stock Performance: Insights for Investors

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Budget 2025-26: A Plan to Address Key Gaps in the Renewable Energy Ecosystem
Business, Equities, Markets - January 15, 2025

Budget 2025-26: A Plan to Address Key Gaps in the Renewable Energy Ecosystem

Budget 2025-26: A Plan to Address Key Gaps in the Renewable Energy Ecosystem

Overview and Current Scenario
The renewable energy sector is at a pivotal point as India prepares for the Union Budget FY25–26. Industry experts have expressed their expectations for additional funding, legislative actions, and support systems to hasten India’s shift to clean energy. The government’s dedication to sustainability was demonstrated by the 2024–25 budget’s significant rise in the renewable energy provision, which went from the previous year’s revised estimate of Rs 7,848 crore to Rs 19,100 crore.

Energy is pulsing through the most recent renewable energy report card. According to the latest report released by the Ministry of New and Renewable Energy, India’s total installed capacity witnessed a surge of about 15.84%, 209.44 GW in December 2024, from about 180 GW in the period last year. Compared to the 13.05 GW installed in 2023, the total capacity added in 2024 was 28.64 GW, a 119.46% increase year over year. Solar power led the rise in 2024 with the addition of 24.54 GW, but hydro used to be a significant contributor to the expansion of RE capacity. Its cumulative installed capacity increased from 73.32 GW in 2023 to 97.86 GW in 2024, a 33.47% increase. With an extra 3.42 GW added in 2024, the overall wind capacity increased to 48.16 GW, a 7.64% increase from 2023. Wind energy also played a role in this expansion.

Now, at about 210 GW, RE capacity has surpassed 42% of its 2030 objective of 500 GW. To meet the RE target set by Prime Minister Narendra Modi at the Glasgow climate summit in 2021, an additional 290 GW will need to be added over the course of the following six years. Even though last year’s yearly capacity gain was remarkable by historical standards, it is insufficient to reach 500 GW of RE capacity by 2030. To reach this goal, the yearly run rate will need to increase to around 50 GW.

Even while everyone involved in the RE sector is optimistic, it suggests that additional actions and policies are required to accelerate the development of RE capacity. The upcoming Union budget might provide the perfect opportunity to address some of the gaps preventing the quick integration of RE power.

Key Issues hindering the progress of the RE Sector

Rooftop Solar suffers from slower growth
For utility-scale projects, rooftop solar units are a convenient approach to rapidly increase RE capacity due to gestation time and other considerations. The PM – Surya Ghar: Mufti Bijli Yojana is a positive start in this area as it intends to employ rooftop solar units to illuminate one crore houses with an investment of Rs 75,000 crore.

However, the plan appears to be moving at a slower pace than estimated. According to estimates from industry specialists, over 6 lakh installations have been completed to date. This must rise quickly, and the target may have to be expanded in order to meet the desired capacity in the near future. According to sources, the national goal is to reach 40 GW of rooftop solar power by 2025, even if targets in the RE sector are always changing. Currently, the capacity of rooftop solar power in India has reached up to 13 GW (as of the latest reports updated in 2024). Nevertheless, the scheme appears to be moving slowly. According to estimates from industry specialists, over 6 lakh installations have been completed to date. This must rise quickly, and the target may have expanded. Further, the national goal is to reach 40 GW of rooftop solar power by 2025, even if targets in the RE sector are always changing. The capacity has reached 13 GW through the end of 2024.

Issues ranging from financial obstacles to legal restrictions and a lack of awareness are blamed for the sluggish growth. For the rooftop solar project to be successful, these issues must be addressed in the February Union budget.

Energy Storage acts as a barrier to RE sector development
Energy storage is another issue that frequently impedes the advancement of RE. India’s energy storage system has not kept up with the country’s increased RE generation. As a result, there is an imbalance between the supply and demand for energy, making the grid more susceptible to blackouts and inefficiencies. India is now obsessed with two forms of energy storage: pumped storage and batteries. These projects may not be able to meet the 60 GW of storage capacity required by 2030, based on their present and planned state.

India needs to take a multifaceted approach in order to get past this storage barrier and realize its full RE potential. This entails making investments in the development of novel battery technologies, broadening its range of energy storage products, and cultivating an environment that facilitates the quick implementation of storage solutions. Thus, by offering incentives to promote the creation of new storage technologies and their implementation, the February budget can start the process.

Smart Meters still in incubation?
Another weak link that prevents RE growth is grid infrastructure. The distribution companies in different states must be connected, and smart meters must be quickly deployed, in order to transition to a clean electricity system. Once more, there is a significant discrepancy between execution and target. Approximately 7.3 million smart prepayment meters have been installed nationwide thus far under the Revamped Distribution Sector Scheme (RDSS), according to statistics presented to Parliament in December of last year.

With an investment of Rs 3.3 lakh crore, the program, which was introduced in July 2021, aims to install over 250 million smart prepaid meters by March 2025. Thus, the lack of progress in smart meter development raises a legitimate question.

Conclusion
There is an opportunity to examine the problem and provide improvements in the Union budget for 2025–2026. While there are many opportunities in RE, there are also many challenges. It is clear that a yearly budget is insufficient to handle every problem. These yearly exercises, however, give the government a chance to address any current issues that could hinder the expansion of RE.

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Railway Sector’s Budget Allocation and Stock Performance: Insights for Investors

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%
Equities, Market News, Markets, Research, Research Reports, Result Updates - January 10, 2025

IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%

IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%

Company Name: Indian Renewable Energy Development Agency Ltd |  NSE Code: IREDA |  BSE Code: 544026 |  52 Week high/low: 310 / 104| CMP: INR 201 |   Mcap: INR 54,078 Cr   |  P/BV – 5.81

About the stock

IREDA is PSU NBFC engaged in the business of financing green energy projects. Its finances project such as solar, wind power, hydro power etc. GoI has conferred the Navratna status upon IREDA in April 2024. Loan portfolio well diversified across the 23 states and 4 UT in FY24. It contributing major role in fueling the India’s RE taget of 500 GW by 20230.

Robust growth in loan book up 36% YoY /7% half yearly

As on 30 December 2024, loan book stood at 68,960 Cr represent growth of 36% YoY while half-yearly growth was moderate at 8%. This growth led by loan given to state utilities (68% YoY) followed by hydro power at 35%, solar 18% and wind at 3%.

Along with loan book disbursement and sanction grew 25% and 45% to stood at 7,449 Cr and 13,227 Cr respectively.

Asset quality improved YoY but dissapoint QoQ

During the Q3FY25, gross asset quality has improved by 22 bps YoY declined in GNPA stood at 2.68% While QoQ jump 49 bps during the quarter. NNPA down 2 bps YoY to 1.5% but jump 46 bps QoQ despite the surge in provision coverage ratio.

Borrowing jump 39% during the quarter – domestic rise while foreign declined

During H2FY25 company’s borrowing increased by 39% to stood at 57,931 Cr. Dometic borrowing raised 54% to 49,361 Cr while foreign borrowings declined 12%.

In domestic borrowing, bank loan weightage has declined to 45% in Q2FY25 vs 57% in Q3FY24. while money raised through bonds weightage rise to 55% in Q3FY25 vs 43% in Q3FY24. The rising chance of rate cuts will declined the borrowing cost for company as bank loan and bond both equally weight in borrowing.

Within the foreign borrowing, un-hedged portion rise to 26% in Q3FY25 vs 21% in Q3FY24. While hedged portion has declined equally to increased in un-hedged. The surge in un-hedged portion increased the currency risk.

Valuation and key metrics

currently stock is trading at 5.79x its book value while the industry median P/B stood at 2.41x. During the quarter, Yield on loan jump 9 bps to 9.96% while Cost of borrowing decline by 15 bps to 7.68%. This result in surge in spread and NIMs by 23 bps and 13 bps to stood at 2.28% and 3.33% respectively. The cost of borrowinf can further decline in coming quarter as RBI ready to ease monetary policy. Capital Adequacy ratio stood at 19.63% which is above the guidance of RBI but decline by 425 bps YoY.

Q3FY25 Results updates

Interest income increased by 37% YoY (5% QoQ) to 1,654 Cr while interest expense jumped 36% YoY (0% QoQ) to 1,032 Cr. This result in NII grew by 39% YoY (14% QoQ) to 622 Cr. The surge in NII led by Nims expansion and increased in new loan book.

PPOP grew 52% YoY (30% QoQ) to 642 Cr due to lower Opex (down 65% YoY). While PAT surged by 27% YoY and 10% on QoQ basis to stood at 425 Cr.The PAT lowered due to higher growth in provision and tax expenses. 

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Bank Q3 Results reflect slower credit growth

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%
Business, Equities, Market News, Markets - December 31, 2024

Accelerated Growth in India’s Renewable Energy Capacity in 2024

Accelerated Growth in India’s Renewable Energy Capacity in 2024

India’s renewable energy sector is witnessing a remarkable acceleration in capacity additions, with 14,907 megawatts (MW) of new renewable energy generation capacity added between April and November 2024. This is nearly double the amount of capacity added during the same period in 2023. The rapid increase in renewable energy installations is a clear indicator of the industry’s ability to capitalize on favorable market conditions and policy incentives, positioning India to achieve its renewable energy goals ahead of schedule.

Key Drivers Behind the Surge in Renewable Energy Additions
Several factors have contributed to this surge in capacity additions, making 2024 a particularly strong year for the renewable energy sector in India.

1. Large Project Pipeline and Favorable Market Conditions
A significant portion of the recent growth can be attributed to a robust pipeline of renewable energy projects. According to industry reports, around 240 GW of renewable energy projects are currently in the tendering stage, creating a substantial backlog for developers. This large volume of projects provides a clear signal that India’s renewable energy market is expanding rapidly.

Additionally, the declining prices of solar modules have played a pivotal role in accelerating project installations. Solar module prices have softened in recent months, thanks to improved manufacturing capabilities and global supply chain efficiencies. This has made renewable energy projects more economically viable, encouraging developers to fast-track installations to capitalize on these favorable cost conditions.

2. Policy Support and Incentives
Government policies have also been a major driver of growth. One of the most significant incentives provided by the Indian government is the waiver of interstate transmission charges for renewable energy projects commissioned before June 2025. This policy helps reduce the overall cost of project development, making it more attractive for developers to invest in new renewable energy projects.

In addition to this, India’s commitment to achieving its renewable energy target of 500 GW by 2030 has led to several initiatives designed to promote green energy investments. The government has rolled out a number of schemes that include financial incentives, subsidies, and accelerated project approval processes. These efforts, combined with supportive regulatory frameworks, have created an environment that encourages rapid growth in the renewable energy sector.

3. Demand from Industrial and Commercial Users
Another important factor driving the surge in renewable energy installations is the increasing demand from industrial and commercial users. As businesses and corporations set ambitious sustainability goals, there has been a significant shift toward securing renewable energy sources to meet their growing energy needs.

In particular, the private sector is playing a key role in this transition. Many large corporations are actively seeking renewable power to meet their Environmental, Social, and Governance (ESG) targets and reduce their carbon footprints. As a result, developers are facing growing demand from these sectors, which in turn is helping to accelerate the pace of project installations.

Industrial and commercial users are not only looking for cost-effective renewable energy solutions but are also keen to lock in long-term power purchase agreements (PPAs) that ensure stable pricing and reduce exposure to fluctuations in conventional energy prices. This demand is helping to drive the development of new renewable energy infrastructure, contributing significantly to the overall growth of the sector.

Future Outlook: India’s Renewable Energy Sector to Outpace Previous Records
If the current pace of capacity additions continues, India is on track to exceed previous annual highs in renewable energy project installations. The country’s renewable energy capacity base is set to rise significantly over the next few years, helping India move closer to its 2030 target. The consistent growth in renewable energy installations will likely lead to increased investment in the sector, as both domestic and international investors continue to recognize the long-term potential of India’s renewable energy market.

The government’s continued focus on expanding the renewable energy infrastructure, coupled with the incentives and favorable market conditions, will play a crucial role in driving further capacity additions. With the combined efforts of developers, policymakers, and the private sector, India’s renewable energy sector is poised for continued growth.

Implications for the Supply Chain and Related Sectors
As India continues to scale up its renewable energy capacity, the supply chain that supports the sector will also benefit. The demand for components such as solar modules, wind turbines, and batteries is expected to rise, creating significant opportunities for companies in the manufacturing and supply chain space.

Additionally, the increased demand for Engineering, Procurement, and Construction (EPC) services will help boost companies in this domain. EPC contractors, who are responsible for the design, construction, and commissioning of renewable energy projects, will see heightened activity as more projects are awarded and come online.

Companies involved in the production and supply of renewable energy components, as well as those providing EPC services, are likely to experience growth as the renewable energy capacity base in India expands. This will provide a positive feedback loop, where the growth of the renewable energy sector fuels the expansion of the supply chain and vice versa.

Conclusion: A Positive Growth Trajectory for India’s Renewable Energy Sector
India’s renewable energy sector is experiencing an unprecedented acceleration in capacity additions, driven by a combination of favorable market conditions, government incentives, and strong demand from industrial and commercial users. The surge in capacity additions and project awards points to a robust future for the sector, with the potential to exceed previous records and achieve India’s renewable energy targets well ahead of schedule.

This growth not only supports India’s transition to cleaner energy but also presents significant opportunities for companies involved in the renewable energy supply chain. As the government continues to push for increased investments in green energy, the renewable energy sector is poised to remain a key pillar of India’s energy landscape for years to come.

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Business, Equities, Market News, Markets - November 22, 2024

India's Power Sector: A $656 Billion Investment Opportunity Driving a Green Revolution

India’s Power Sector: A $656 Billion Investment Opportunity Driving a Green Revolution

India’s power sector is entering a transformative phase, with a massive cumulative investment opportunity of approximately USD 656 billion spanning power generation, transmission, and distribution. This surge in investments is driven by rising electricity demand, fueled by population growth, the rapid adoption of electric vehicles (EVs), and the country’s ambitious renewable energy (RE) goals, including achieving a 500 GW RE capacity by 2030. While the sector has witnessed remarkable growth in recent years, the long-term potential remains immense.

Per Capita Power Consumption: A Long Road Ahead
India’s annual electricity demand is projected to grow at a CAGR of over 7%, higher than the previous estimate of 5%, driven by emerging demand drivers such as EVs, data centers, and increased industrial electrification. Annual electricity consumption is expected to rise from 1,138 BU in FY22 to 1,610 BU by FY27 at a CAGR of 7.18%.

However, India’s per capita electricity consumption of 1.2 MWh remains significantly below the global average of 3.265 MWh. In contrast, developed nations like the United States, Australia, Japan, and Russia boast consumption levels of 12.7 MWh, 9.9 MWh, 7.9 MWh, and 7 MWh per capita, respectively, highlighting the growth potential in India’s power demand.

Targeting 900 GW Capacity by 2032
India’s current installed power capacity stands at 442 GW, with 55% thermal power and the rest comprising renewable energy sources. By 2032, the country aims to achieve a total capacity of 900 GW, with 68-70% renewables and the remainder from thermal sources. This ambitious expansion demands significant funding across the power generation, transmission, and distribution segments.

Government Support and Strategic Initiatives
The Indian government has made substantial budgetary allocations to the power and renewable energy sectors:

* Ministry of Power: INR 205.02 billion for FY2024-25 (vs. INR 206.71 billion in FY2023-24).
* Ministry of New and Renewable Energy (MNRE): INR 191 billion for FY2024-25, an 87% increase from INR 102.22 billion in FY2023-24.

Key initiatives include:
* Promoting pumped storage projects and collaborations on advanced nuclear energy technologies.
* The Green Hydrogen Transition Programme, incentivizing green hydrogen and ammonia production and electrolyser manufacturing.
* Development of solar parks and dedicated renewable energy corridors, backed by waivers on ISTS charges and relaxed foreign investment norms.
* Strengthening discom payment profiles through the Late Payment Surcharge Scheme, enhancing liquidity in the sector.

PFC and REC: Growth Potential with Discounted Valuations
The Power Finance Corporation (PFC) and REC Limited, key enablers of India’s power sector growth, have played a pivotal role in sustaining sectoral momentum. In FY2023-24, their cumulative disbursements rose by 71% YoY to INR 3,142.07 billion, while sanctions grew by 27% YoY to INR 6,781.7 billion.

Valuation Opportunity: REC and PFC Trading Below Industry Median
PFC and REC are currently trading at 1.43x and 1.79x P/BV, respectively—36% and 28% below their peak valuations and below the industry median P/BV of 2.22x. With robust growth prospects, these valuations present a compelling opportunity:

* Loan Book Growth: Expected to grow at 20-25% CAGR through FY27.
* Disbursements Growth: Projected at 30-35% CAGR.
* Net Interest Income (NII): Estimated to rise at 25-30% CAGR, supported by stable NIMs of 3%-3.5% and strong asset quality.
The combination of discounted valuations and robust fundamentals positions PFC and REC as attractive investment opportunities in India’s power sector transformation.

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IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%
Business, Equities, Market News, Markets - October 18, 2024

India’s 2030 Renewable Energy Targets: A Green Transition in Focus

India’s 2030 Renewable Energy Targets: A Green Transition in Focus

India’s commitment to renewable energy has gained momentum, with ambitious targets set for 2030 to drive the country’s transition towards a sustainable energy future. These goals, aimed at curbing carbon emissions and boosting energy security, also represent a significant shift in the power sector, promising new opportunities and challenges for investors.

Ambitious Targets and Current Progress
India plans to achieve 500 GW of non-fossil fuel-based capacity by 2030, marking a pivotal step towards decarbonization. As of June 2024, the total installed renewable capacity stands at approximately 174 GW, including solar, wind, hydro, and bioenergy sources. Solar energy leads the pack with 71 GW, followed by wind energy at 44 GW. The government aims to ramp up capacity with an annual increase of 30–40 GW over the next few years to align with these targets.

Key Policy Support Driving Growth
The government has introduced various policy frameworks to accelerate renewable energy adoption. The recently announced Production Linked Incentive (PLI) schemes offer financial support to domestic manufacturers, reducing import dependency. Furthermore, tenders for hybrid projects (combining solar, wind, and storage solutions) have gained momentum, creating a more balanced energy mix and improving grid stability.

In parallel, initiatives like green hydrogen projects and offshore wind energy have been prioritized, diversifying India’s renewable portfolio. By capitalizing on technological advancements and reducing tariffs through competitive bidding, the sector is positioned to attract both domestic and foreign investment.

Challenges Hindering Fast-Track Execution
However, certain hurdles could slow down progress. Land acquisition continues to be a bottleneck, particularly in high-potential regions like Rajasthan and Gujarat. Project developers often face delays due to environmental clearances and logistical bottlenecks. Additionally, grid integration remains a challenge, as intermittent sources like solar and wind require large-scale storage solutions to ensure stable supply.

Financing is another concern. Despite falling costs, many projects require substantial capital investments. Banks and financial institutions are cautious about lending to long-gestation infrastructure projects, further exacerbating the funding gap. Regulatory uncertainties and changes in power purchase agreements (PPAs) also weigh on investor sentiment.

Investment Opportunities for the Private Sector
India’s renewable energy journey is generating significant interest from global investors. Major companies, including Adani Green, Tata Power Renewables, and ReNew Power, are expanding their portfolios to benefit from the favorable policy environment. With increasing pressure on corporations to reduce their carbon footprint, large-scale power purchase agreements between private players are becoming more common, providing steady revenue streams for developers.

The rise of Electric Vehicle (EV) adoption is also expected to contribute to renewable energy growth. As EV infrastructure develops, the demand for clean power sources will rise, pushing companies to explore distributed energy solutions and rooftop solar projects.

Geopolitical and Climate Implications
The energy transition aligns with India’s climate commitments under the Paris Agreement, aiming to reduce carbon intensity by 45% from 2005 levels by 2030. On the geopolitical front, reduced dependence on fossil fuel imports will enhance energy security and position India as a leader in the global renewable space. However, achieving these ambitious targets requires sustained policy support, financial backing, and close collaboration between the public and private sectors.

Conclusion: A Critical Decade for India’s Energy Future
The path to 2030 offers both opportunities and challenges for India’s energy landscape. While policy support, technological advancements, and private sector participation are fueling growth, addressing logistical, financial, and regulatory issues will be crucial to meeting targets on time. From an investment perspective, the renewable energy sector presents a compelling long-term opportunity, with sustainable growth potential and alignment with global environmental goals.

This decade will be a defining one for India’s energy future as it races to meet its green ambitions. Investors with a long-term view can benefit from the unfolding transition, but success will hinge on a delicate balance of innovation, infrastructure, and policy execution.

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India's Power Usage Rises 6% to 130.40 Billion Units in December
Business, Equities, Expert Views, Investor Forum, Market News, Markets - October 10, 2024

India’s Power Demand Set to Surge to 446 GW by 2030

India’s Power Demand Set to Surge to 446 GW by 2030

India’s power sector is at the brink of unprecedented growth as the country prepares for a significant increase in energy demand. According to the Central Electricity Authority (CEA), peak power demand is expected to reach 270 gigawatts (GW) in the next fiscal year, with a projection of soaring to 446 GW by 2030. CEA Chairperson Ghanshyam Prasad shared these insights during the “Brainstorming Session on Indian Power Sector Scenario by 2047.” The two-day event, hosted in collaboration with the Federation of Indian Chambers of Commerce and Industry (FICCI), focused on India’s evolving power needs and strategic measures to meet this surge.

Drivers of Rising Power Demand

India’s power demand is growing rapidly, driven by key factors such as industrialization, urbanization, and the increasing adoption of electric vehicles (EVs) and renewable energy sources. Over the next several years, the demand is expected to grow at a compound annual growth rate (CAGR) of 7-8%. Prasad emphasized that to meet this growing demand, robust capacity additions across various sectors of power generation will be crucial.

In line with the government’s focus on sustainability, much of this added capacity will come from renewable sources. The current plan includes the addition of 40 GW from a mix of thermal, solar, wind, hydro, and nuclear power. Of this, renewable energy, particularly from solar and wind, will make up a substantial portion, aligning with India’s broader efforts to reduce carbon emissions and transition to cleaner energy.

Capacity Expansion and Investment Requirements

To meet the expected demand, the Indian government is set to invest between ₹5-6 lakh crore over the coming years. This investment will focus not only on boosting power generation but also on expanding the country’s transmission capacity, ensuring that new energy resources are seamlessly integrated into the national grid.

The plan includes a 100 GW transmission expansion, which is key to supporting the anticipated growth in renewable energy. This expansion will enable the smoother integration of solar and wind power into the grid, which is crucial as India targets the installation of 500 GW of non-fossil fuel energy capacity by 2030. This ambitious goal reflects the country’s commitment to energy security while reducing its reliance on fossil fuels.

Strategic Distribution Planning for the Future

Prasad also highlighted the need for efficient distribution planning to meet the growing energy demand across both urban and rural areas. The CEA has submitted a 10-year distribution plan to the Ministry of Power, developed in collaboration with various state governments. This plan aims to address several pressing challenges in the distribution network, including power theft, distribution losses, and aging infrastructure.

Improving distribution efficiency is essential for ensuring that India’s energy system remains resilient. By focusing on these areas, the government hopes to reduce energy losses, ensure equitable distribution, and provide reliable power across the country. This will also help lower operational costs in the long run, enhancing the sustainability of the power sector.

Renewable Energy’s Role in Meeting Future Demands

India’s shift towards renewable energy is a central component of its strategy to meet future energy demands. The government is aiming for 500 GW of non-fossil fuel energy capacity by 2030, with solar and wind energy forming a significant part of this. The CEA’s projections reflect the increasing importance of renewables in the energy mix, not only for reducing carbon emissions but also for ensuring that energy demand is met sustainably.

The upcoming capacity additions will play a crucial role in achieving this target. Prasad stressed that the government is committed to ensuring that the growing power demands, both in urban and rural India, are met efficiently and sustainably. This involves collaboration between the CEA, industry stakeholders, and state governments to build a resilient energy infrastructure capable of handling the increasing load.

Conclusion

India’s power sector is on the verge of significant expansion, driven by rising demand and a strong focus on renewable energy. With a peak demand forecasted to reach 270 GW in the next fiscal year and a projection of 446 GW by 2030, the government is committed to making the necessary investments in power generation, transmission, and distribution.

The 100 GW transmission expansion and strategic distribution plan reflect the nation’s dedication to providing reliable, sustainable, and affordable power. As India continues its journey towards becoming a global leader in renewable energy, its efforts to upgrade and expand the power infrastructure will be crucial in shaping a sustainable energy future.

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Business, Equities, Market News, Markets - September 18, 2024

Green Dreams, Grey Reality: 30 GW Faces Hurdles in India

Green Dreams, Grey Reality: 30 GW Faces Hurdles in India

India’s renewable energy sector, despite its rapid expansion and ambitious targets, is currently facing significant hurdles in selling nearly 30 gigawatts (GW) of green power capacity. This challenge stems from the complexities involved in finalizing agreements for power purchase and supply amidst a landscape of inconsistent tariffs and grid connectivity issues. The situation has become more pronounced as stakeholders await the implementation of uniform tariffs and improvements in grid infrastructure.

According to sources familiar with the matter, approximately 15 GW of renewable energy capacity is yet to secure power purchase agreements (PPAs). Additionally, another 14 GW is waiting for power supply agreements (PSAs) to be finalized. In the renewable energy supply chain, power developers usually enter into PPAs with power procurers such as state-run entities like the Solar Energy Corporation of India (SECI), NTPC Ltd, and SJVN Ltd.. The delay in finalizing these agreements not only affects the operational viability of these projects but also creates bottlenecks in achieving broader policy goals for renewable energy expansion in India.

The challenge is particularly pronounced for older renewable projects, especially those focused on solar energy. As reported, projects developed more than a year ago are finding it increasingly difficult to attract buyers. This situation is partly because projects that were developed recently have already managed to finalize their agreements, thereby securing their place in the market. In contrast, older projects are becoming less attractive due to a variety of factors, including declining technology costs and increasing competition from newer projects that can offer power at lower tariffs.

India’s renewable energy landscape has been evolving rapidly, with the government setting ambitious targets to expand green energy capacity. The country aims to tender up to 50 GW of renewable power projects each year until FY28. Prime Minister Narendra Modi reaffirmed this commitment on August 15, underscoring India’s intention to lead in renewable energy production globally. However, the aggressive push to expand renewable capacity has coincided with a slowdown in signing necessary agreements, creating a surplus of unsold capacity in the market.

The situation has been exacerbated by the trend of continuously falling tariffs in the renewable energy sector. Projects with lower tariffs keep entering the market, making power generated from older projects, which may have been developed at a time of higher capital costs and less favorable tariffs, increasingly unattractive to potential buyers. This creates a market paradox where, despite the surge in green power generation capacity, the demand does not match the supply at current pricing levels.

This market oversupply comes at a time when India is aggressively tendering new projects, aiming for significant annual increments in green energy capacity. According to data from JMK Research, there is a substantial amount of capacity bid out each year. However, the accumulation of unsold capacity raises questions about the sustainability of the current approach. If agreements are not finalized in a timely manner, it could deter investors and developers from participating in future tenders, potentially derailing India’s renewable energy goals.

Furthermore, regulatory and policy uncertainties, particularly regarding the implementation of uniform tariffs, continue to be a significant concern for stakeholders. While the industry has been advocating for more consistent and predictable policies, there has been little movement from the government on this front. Queries sent to the Union Ministry of New and Renewable Energy and SECI remain unanswered, reflecting a gap in communication and coordination that could further dampen investor sentiment.

On one hand, there is tremendous potential for growth, backed by government support and an increasing global focus on sustainable energy. On the other hand, market and regulatory challenges need to be addressed urgently to prevent a backlog of unsold capacity, ensure investor confidence, and align market dynamics with policy ambitions. The next few years will be crucial in determining whether India can achieve its renewable energy goals and emerge as a global leader in green energy or whether these systemic challenges will lead to a slowdown in progress.

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