India Needs USD 700 Bn Investment To Meet Net-Zero Goals For Power Sector: Moody's

New Delhi, Feb 20 (KNN) India's power sector will require approximately USD 700 billion in investments over the next decade to support the nation's 2070 net-zero commitment, according to a comprehensive analysis by Moody's Ratings.

The sector, which currently contributes 37 percent of the country's carbon emissions, faces significant challenges in transitioning from its heavy reliance on coal-fired generation.

The rating agency projects annual investment requirements between Rs 4.5 trillion to Rs 6.4 trillion (USD 53 billion to USD 76 billion) through fiscal year 2034-35, with investments scaling up to Rs 6 trillion to Rs 9 trillion annually during fiscal years 2026-51. 

These substantial investments, representing approximately 2 percent of real GDP over the next decade, will encompass capital expenditure for electricity generation, including renewable energy, coal, and nuclear power, along with transmission, distribution, and energy storage infrastructure.

Despite ambitious renewable energy targets, Moody's forecasts that India's robust economic growth, projected at 6.5 percent annually over the next decade, will necessitate a 35 percent expansion in coal-based power generation capacity, from 218 GW to approximately 295 GW. 

This expansion reflects the anticipated 6 percent compound annual growth rate in power demand, driven by increasing per capita electricity consumption, which currently stands at 1,255 kilowatt-hours, roughly one-third of the global average.

The transition pathway envisions installed generation capacity doubling by fiscal 2034-35 to meet an expected 1.7 to 1.8-fold increase in power demand. 

Non-fossil fuel power is projected to constitute 45-50 percent of total output by fiscal 2034-35, a significant increase from 23.5 percent in fiscal 2023-24. 

To achieve these targets, the sector will require a combination of public and private investment, with private sector participation particularly crucial in renewable energy development. 

Moody's emphasises that access to long-term, low-cost capital and foreign investment will be essential to bridge the substantial funding gap, with conventional bank lending and debt capital markets playing pivotal roles in financing both under-construction and operational projects.

(KNN Bureau)