With the market buzzing with budget expectations just ahead of the event, some believe segments like data centres and green hydrogen could be key drivers of private capital expenditure.
Data centres
With increasing data usage, there is an increasing need to store the information, and there is a possibility that the government in the upcoming budget will announce some incentives to encourage and promote participation in this space, some analysts believe.
The rollout of 5G telephony, they say, will lead to higher data generation and to more edge computing, where the data centre is closer to the user. This in turn will drive up demand for hyperscale data centres in India, Nomura said in a December 9 report.
“We expect data center capacity to rise from 675MW (megawatts) at Oct-2022 (vs 400MW at end FY22) to exceed 1GW (gigawatt) levels by FY26F. The strong demand is driven by a) increased cloud adoption and b) personal data protection law which will require data to be stored and used locally,” the report added.
It highlighted that among industrial majors, L&T is a big play in data centre construction in India.
Green hydrogen
India’s National Green Hydrogen Mission has created a host sunrise sectors that investors can bet on, several market participants believe.
One of the world's biggest emitters of greenhouse gases, India has approved a $2.11-billion incentive plan to boost local production and encourage the use of green hydrogen. The move is part of the roadmap to be a net-zero carbon economy by 2070. The country aims for annual production of 5 million tonnes of green hydrogen and hopes to meet at least 10 percent of global demand by 2030.
India will even extend export benefits under a key scheme to domestic green hydrogen fuel manufacturers, Reuters had reported.
The need for energy security has never been more urgent and the drive towards a net-zero emission regime is being pursued globally including large independent power producers in India, said Sandeep Upadhyay, managing director, infrastructure, Centrum Capital, a financial services company.
He said ramping up renewable energy generation, energy diversification and increasing energy storage and green hydrogen are themes being pursued by the leading energy generators as a part of their transition plan.
However, he cautioned that the transition may be slow given the viability challenges at the moment akin to high capex in the solar sector which was seen as a non-starter but has where costs have now reduced by 70-75 percent in the last decade or so. But eventually, green hydrogen will also become viable like solar energy, he said.
In fact, clean tech-focused and impact fund managers have started increasing their allocation to companies that are on track with the robust energy transition themes including storage and green hydrogen themes, Upadhyay said.
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