India's target of 500 gigawatts (GW) of renewable energy capacity by 2030 will require $190 billion-$215 billion of investment over the next seven years, while another $150 billion-$170 billion of investment will be required for electricity transmission and distribution as well as energy storage, according to estimates from ratings agency Moody's.
As on March 31, India's total renewable energy capacity stood at 144 GW, including large hydro capacity. Experts anticipate that the push for renewable energy will continue under Prime Minister Narendra Modi's third term.
India will have to add about 50 GW of renewable energy capacity annually over the next five years, beginning 2024, to meet the ambitious target. So far, India’s best performance has been 15 GW a year.
Infrastructure companies will be spending on energy transition to meet demand, however, government policies and stable regulatory frameworks will support credit quality, the ratings agency said in a media briefing on June 12.
Strong policy support has helped the country increase the share of renewable energy in its power capacity mix to around 43 percent in fiscal 2023 and fiscal 2024, according to the agency.
The agency flagged modest impact to infrastructure lending from RBI's new rules on loans provisioning, However, the ratings agency said companies executing large scale energy/infrastructure projects have the ability to factor the rise in borrowing cost.
“We expect the strong growth in India's renewable energy capacity to continue, although coal will remain a major source of electricity generation over the next 8-10 years,” said Abhishek Tyagi, a Moody’s vice president and senior credit officer.
Separately, Moody's affiliate Icra, expects government to maintain a strong focus on road sector investments through increasing capital outlays.
“India’s road construction will likely grow 5 percent-8 percent to 12,500 km-13,000 km in fiscal 2025, following a robust expansion of around 20 percent in fiscal 2024," said Girishkumar Kadam, Icra’s senior vice president and group head, corporate ratings.
It also sees cargo volumes to grow 6 percent-8 percent in the current fiscal year on the back of healthy growth in the container and coal segments, although lower trade volumes driven by slowing global economic growth and geopolitical tensions remain key risks.
Investments in airport infrastructure will also remain healthy at around Rs 55,000 crore- Rs 60,000 crore of committed capex over the next 3-4 years channeled toward projects including new greenfield airports, brownfield development and airport expansions under the Airports Authority of India, according to the agency.
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