India will invest more than $10 billion in clean energy in 2015, according to a recent forecast from Bloomberg New Energy Finance (BNEF).
The numbers touted for this year represent something of a bounce back for Indias clean energy sector, having seen a relatively modest $7.9 billion invested in 2014, placing the country seventh worldwide in clean energy investment.
Although this years upswing will still see the country fall slightly short of the $13.1 billion invested in the sector in 2011, analysts working within India are bullish about the year ahead, and in particular the role solar power will play in clean energy development.
"After two years of continuous decline in investments, in both India and around the world, the trend reversed last year," said BNEF lead India solar analyst Bharat Bhushan Agrawal. "We expect investment in India to rise in 2015 and later, particularly with the rise of solar power."
The newly installed Narendra Modi-led government, which came to power last May, has been proactive on the PV front. Its headline initiative is the 100 GW of solar PV by 2022 plan, and a wider goal of $100 billion of clean energy investment over the next five years.
These confident goals have turned the heads of foreign investors, many of whom are confident that Indias government means business. "Interest in India from domestic and foreign investors has grown in the last six months," said BNEFs head of south and southeast Asia research Aishish Sethia.
Part of Modis plan is to develop Indias grid infrastructure and ward off the regular power blackouts that befall vast portions of the country. Analysis by BNEF shows that India boasts one of the worlds lowest levelized costs of renewable energy generation, and solar energy and other renewables are increasingly gaining cost competitiveness on more traditional sources.
BNEF expects India to install around 2.5 GW of solar PV capacity this year, which is around 1.5 times the figure added in 2014 (around 800 MW), while the wind sector is set to grow by 2.8 GW a 22% increase on 2014.
Further, the government is planning a suite of power sector reforms designed to make India a more attractive proposition for foreign investment. These reforms include the unbundling of power distribution, the enforcement of renewable purchase obligations and forcing power producers to adopt more renewable generation capacity.
"The planned reforms are going to strengthen renewable in India further, but the federal establishment also needs to align with the state governments," added Sethia.
Obama’s visit yields tentative progress
With 13 of the worlds most polluted cities, the issue of air quality was high on the agenda as U.S. President Barack Obama visited India to meet with Prime Minister Modi. The U.S. President had hoped to persuade India to agree to a climate deal similar to that struck late last year between the U.S. and China.
However, Obama was left disappointed on this issue as Modi sought to make it clear that India will, for now, independently manage its own environmental affairs. The agreement that has been concluded between the U.S. and China does not impose pressure on us, said Modi. India is an independent country. But climate change and global warming itself is a huge pressure."
There were, however, a couple of less ambitious deals struck on renewable energy and air pollution that Obama said would "help promote clean energy and confront climate change". The U.S. is going to provide tools to India to help the country monitor air pollution and tackle the emissions that cause smog, which is a growing problem in most Indian cities.