India's Infrastructure Sector to Invest $190-215 Billion in Renewable Energy by 2030
Thursday, 13 June 2024, 10:07 IST
India's drive towards renewable energy and infrastructure development will require substantial investments, as highlighted by recent estimates from Moody’s Investors Service. To achieve its ambitious target of 500 gigawatts (GW) of renewable energy capacity by 2030, the country will need to invest between $190 billion and $215 billion over the next seven years. Additionally, another $150 billion to $170 billion will be necessary for enhancing electricity transmission, distribution, and energy storage systems.
Abhishek Tyagi, Vice President and Senior Credit Officer at Moody's, stated, "The sizeable pipeline of announced projects will keep the financial leverage of renewable power companies rated by Moody’s high over the next 2-3 years a credit negative but the leverage of government-related issuers will remain moderate over the same period, given their relatively strong balance sheets".
Despite the aggressive expansion in renewable energy, Tyagi noted that coal will continue to play a significant role in India's energy mix for the next 8-10 years. However, government policies and stable regulatory frameworks are expected to support the credit quality of investments in renewable energy. These policies have already contributed to increasing the share of renewable energy to about 43% of India's total power capacity mix in fiscal years 2023 and 2024, aiding the country's 2030 transition targets and its long-term goal of achieving net-zero emissions by 2070.
In parallel with the renewable energy sector, India's infrastructure landscape is witnessing increased spending in transportation. ICRA, an affiliate of Moody's, predicts substantial investments in roads, ports, and airports. The Ministry of Roads, Transport and Highways (MoRTH) has seen its budgetary allocation for the road sector rise to INR 2.7 lakh crore for fiscal 2025, reflecting a compound annual growth rate of 22% over the past decade.
Girishkumar Kadam, Senior Vice President and Group Head of Corporate Ratings at ICRA, commented, "India’s road construction is expected to grow by 5%-8% to between 12,500 km and 13,000 km in fiscal 2025, following a robust expansion of around 20% in fiscal 2024".
Moreover, investments in airport infrastructure are on the rise, with commitments of around INR 55,000 crore to INR 60,000 crore over the next 3-4 years. These funds will be used for the development of new greenfield airports as well as the expansion and enhancement of existing facilities. Passenger traffic at airports is forecasted to increase by 8%-11%, reaching between 407 million and 418 million passengers in fiscal 2025. This growth is supported by a resurgence in leisure and business travel and improved international connectivity.
India's rapid digitalization is set to drive approximately INR 1.5 lakh crore in investments into data centers over the next 5-6 years. This substantial investment aims to bolster the country's digital infrastructure capabilities, facilitating the growing demand for digital services and supporting India's position as a leading digital economy.
Abhishek Tyagi, Vice President and Senior Credit Officer at Moody's, stated, "The sizeable pipeline of announced projects will keep the financial leverage of renewable power companies rated by Moody’s high over the next 2-3 years a credit negative but the leverage of government-related issuers will remain moderate over the same period, given their relatively strong balance sheets".
Despite the aggressive expansion in renewable energy, Tyagi noted that coal will continue to play a significant role in India's energy mix for the next 8-10 years. However, government policies and stable regulatory frameworks are expected to support the credit quality of investments in renewable energy. These policies have already contributed to increasing the share of renewable energy to about 43% of India's total power capacity mix in fiscal years 2023 and 2024, aiding the country's 2030 transition targets and its long-term goal of achieving net-zero emissions by 2070.
In parallel with the renewable energy sector, India's infrastructure landscape is witnessing increased spending in transportation. ICRA, an affiliate of Moody's, predicts substantial investments in roads, ports, and airports. The Ministry of Roads, Transport and Highways (MoRTH) has seen its budgetary allocation for the road sector rise to INR 2.7 lakh crore for fiscal 2025, reflecting a compound annual growth rate of 22% over the past decade.
Girishkumar Kadam, Senior Vice President and Group Head of Corporate Ratings at ICRA, commented, "India’s road construction is expected to grow by 5%-8% to between 12,500 km and 13,000 km in fiscal 2025, following a robust expansion of around 20% in fiscal 2024".
Moreover, investments in airport infrastructure are on the rise, with commitments of around INR 55,000 crore to INR 60,000 crore over the next 3-4 years. These funds will be used for the development of new greenfield airports as well as the expansion and enhancement of existing facilities. Passenger traffic at airports is forecasted to increase by 8%-11%, reaching between 407 million and 418 million passengers in fiscal 2025. This growth is supported by a resurgence in leisure and business travel and improved international connectivity.
India's rapid digitalization is set to drive approximately INR 1.5 lakh crore in investments into data centers over the next 5-6 years. This substantial investment aims to bolster the country's digital infrastructure capabilities, facilitating the growing demand for digital services and supporting India's position as a leading digital economy.
