Bullish on India | Lot of global capital looking to tap Indian clean energy space: Sumant Sinha of ReNew

Are you bullish on India?

I am very bullish on India.

Your reasons for that?

The next 25 years are truly going to be India's years. A lot of the basic fundamentals, like demographics, domestic demand, and health of the financial sector, have come together very nicely for India.

Corporates have deleveraged themselves. All of these things are going to lead to a very strong growth in the Indian economy over the next many years. I think the fact that we've had a fairly stable political environment for the last nine years has certainly helped bring all these fundamental facts together. So, when the Prime Minister talks about 'Amritkaal', I truly believe that is going to be the case.

Just to give you an example, India is where China was 25 years ago. In the next 25 years, China grew at 10-12 percent every year. Now, India might not grow at 10-12 percent, but certainly we will grow at 7-8 percent, at the very least. That itself will mean that, over the next 20 years, the Indian economy will grow multiple-fold from where it is right now. I think we will see India as one of the top three economies, not very far away from the top two, if not actually in the top two itself.

Therefore, I’m very bullish on India right now.

Energy transition is turning out to be a big theme, globally. We are seeing countries competing against each other for green hydrogen and battery storage. What should India do to develop them, despite the competition and the challenges?

India is already the third-largest emitter of carbon. Given all the growth that is to come in India over the next several decades, the country's carbon emissions, if left unchecked or if we just carry on with business as usual, are likely to grow several times. This is not going to be good for the world and it certainly will not be good for India as it is one of the most vulnerable populations to climate change. Hence, it’s actually very good that the Indian government is addressing this problem head on, rather than shying away from it.

One of the most important aspects of addressing the problem is energy transition. We know that right now, India is in the midst of a very fundamental, transformative, once-in-a-lifetime kind of an energy transition, where we are moving from fossil-fuel based systems to clean-energy based systems.

Renewable energy is moving us in that direction. In addition, you talked about batteries and green hydrogen … all of those are going to be very fundamental in driving this change. There will be accessibility of clean energy in multiple sectors of the Indian economy.

What is the infra opportunity in India? What more needs to be done to boost investment and execution, especially in energy?

Energy is a core part of infrastructure. We have to service the needs of a large growing population and a large growing economy. We need to increase our entire energy system by double of what it is right now in the next seven years. This really means creating an energy system of the size of the entire European Union energy system over this time period.

It's going to lead to a lot of opportunities. It’s going to lead to a lot of infrastructure development because we will have to build generation capacity and transmission infrastructure. Besides, we will have to have much larger amounts of batteries and green hydrogen.

The whole user side of the economy will also have to change. People will hopefully move towards electric vehicles. Corporates will move towards decarbonised energy systems on their own and start using more clean energy and green hydrogen. So, entire swathes of the Indian industrial economy will become green over this period of time.

Also, there will be an entire manufacturing industry that will get set up as India looks to become ‘Atmanirbhar’ in this time period, as far as equipment supply is concerned.

What are the challenges to India’s energy transition?

We have to make sure that the policies are correct. So far, it has been correct. We have to ensure that in the future as well, whichever governments are there.

The second challenge is that we need land to put up all the generation assets, get right of way for transmission infrastructure and so on. Land acquisition will require a lot of effort as well.

Thirdly, we have to make sure that the grid stays balanced with all the intermittent renewable energy coming in. So, the grid has to become robust and must stay strong.

Fourth, we'll need large amounts of capital. We'll need almost $500 billion, just for the electricity sector over the next 7-8 years. A lot of it will come from domestic sources, but we will also need capital to come in from outside.

The good news is that since the India opportunity is so attractive right now, globally, there is a lot of capital that is looking to play in the Indian clean energy space.

This allows us to fill some of the gaps that might be coming up in the future. We, at ReNew, have raised capital from a number of different sources. That’s because we are a good counter-party, and also because the whole clean energy situation is at such an attractive inflection point right now.

In February, when you rebranded ReNew Power to ReNew, you stated that the company will diversify to being a decarbonisation solutions provider. Give us an update on that.

One of the new areas we're looking at is green hydrogen. Here, we are moving from not only generating electrons but also to generating green hydrogen molecules.

From green hydrogen, we have derivatives such as green ammonia, methanol and even sustainable aviation fuel. Green hydrogen and its derivatives can address almost two times the energy system, as compared to the electricity sector.

We have a joint venture with Indian Oil Corporation (IOC) and L&T for addressing the domestic Indian market. For the export market, we are looking at developing projects, both in India and outside. We are talking to a number of potential customers for buying this off-take. But this whole green hydrogen business will gather steam as we go forward and will become very mainstream by 2030, by the end of this decade.

The second thing we're doing is that we're also developing a carbon offset business. So there's a lot of work we're doing in that area. We're also looking at the digital area -- that's another area which is very important. As we set up more and more of this capacity, we have to make sure that we extract every ounce of performance and that is best done through digital interventions, digital tools and techniques.

We also plan to set up a big manufacturing industry in India.

India’s aspiration to be a $5-trillion economy, many believe, is within reach and may happen sooner than FY27. Can the Indian power sector, with all its challenges, support this growth to $5 trillion and beyond?

Well, we’re already at $3-3.5 trillion. So, if you just do the math and extrapolate, at about 6-8 percent growth, on average, in the next 5-6 years, we will hit that target.

During this time, our electricity demand will also keep increasing -- at 5- 7 percent of growth every year. August was already a record month, and we hit a peak demand of 234 gigawatt (GW).

That will increase to, perhaps, 350 GW by the end of this decade. This means a lot of new generation capacity, grid balancing, storage, pumped hydro, and transmission build-up will have to come into play. If that doesn't happen, the growth of the Indian economy will get held back.

Quality of life will suffer because of the burnouts. We obviously don't want that to happen. Therefore, the energy sector, which is fundamental to the growth of the economy will have to grow along with the Indian economy, and in fact, drive the growth of the Indian economy. So it has a very essential role to play.

The private sector has been the biggest investor in India’s energy transition and this trend is going to continue. So, what role will ReNew play in India’s energy transition journey?

As far as renewable energy is concerned, we will have a central role to play. We are already India's largest renewable energy company with almost 10 percent market share. And as India adds another 300-odd GW in the remaining seven years of this decade, we would hope to get a market share in that.

We also don't want to be just a renewable energy generator, though it will remain our core business. We’d also diversify into green hydrogen, carbon offsets and really become a full-fledged decarbonisation partner for corporates. We hope to certainly play an essential role in that.

You have just launched a book. Congratulations on that. Tell us what it is about?

The book is called Fossil Free - reimagining clean energy in a carbon-constrained world. Look, we now need to totally redesign and reimagine our energy systems for it to become carbon-zero. This means much more renewable energy, much more change on the generation side as well as on the user side.

Climate change is so much upon us that we really don't have a choice. We need to move as fast as possible. Because there are a lot of misconceptions about this sector, I decided to put my learnings in this industry in the last 15 years into a book.

The book is easy to read, and aims to make people understand what the issue is with climate change, how it relates to energy, what can be done to deal with climate change, and why clean energy transition is, in fact, the right thing for India to do. India is playing a leading role in moving from a carbon- based economy to a carbon-light economy.