A recent report by Nomura indicates that India will need approximately USD 200 billion in investments to establish renewable energy (RE) generating assets by the year 2030. This estimate is considered conservative, reflecting India’s ambitious goals for renewable energy generation.
The report also anticipates a substantial increase in the country’s energy demand, projecting a compound annual growth rate (CAGR) of 7 percent from FY24 to FY30. This growth rate surpasses India’s historical energy demand growth, which has hovered around 5 percent.
According to the report, “Based on our conservative estimate, RE generation should drive incremental investments of approximately USD 200 billion to meet India’s targets.” The rise in energy demand is expected to be fueled by several key factors, including the expansion of data centers, the growing penetration of electric vehicles (EVs), and advancements in green hydrogen technology.
These developments may lead to an even higher demand for renewable energy than currently forecasted. The current installed power capacity in India is projected to increase at a CAGR of 10 percent from FY24 to FY30, rising from 450.8 gigawatts (GW) to an impressive 777.1 GW.
In FY24, the country auctioned off 40 GW of renewable energy capacity. However, to achieve its ambitious target of 500 GW of renewable energy capacity by 2030, the report emphasizes that the pace of renewable energy auctions must significantly accelerate.
Approximately 60 GW of capacity will need to be auctioned each year to meet these objectives. The report states, “We believe the pace of RE auctions will have to materially pick up to approximately 60 GW per year.” Fortunately, the industry appears well-positioned to respond to this increasing demand, particularly due to the favorable pricing of solar modules and wind turbines.
Supportive government policies and a strong push from the commercial and industrial (C&I) sectors toward greener energy solutions are identified as key drivers of this growth. Another critical aspect discussed in the report is the potential for renewable energy demand to surge even further once the cost of producing green hydrogen becomes competitive with that of grey hydrogen.
Currently, India’s total hydrogen demand stands at 6 million tons, primarily driven by refineries (3 million tons), fertilizers (2 million tons), and steel production (1 million ton). In terms of electricity demand stemming from electric vehicles, the report estimates a significant increase in the coming years.
By the conclusion of FY25, EVs are projected to account for around 3.4 terawatt-hours (TWh) of electricity demand, constituting merely 0.2 percent of the nation’s total power consumption. However, with the government aiming for 100 percent sales of electric vehicles for new vehicles by 2030, this demand is expected to rise sharply.
The combination of growing energy requirements, supportive policies, and technological advancements positions India to make substantial strides in renewable energy, requiring significant investments to meet its ambitious goals for a sustainable future.
