|
India could face an annual renewable energy financing gap of nearly USD 35 billion as it races to achieve its 500 GW non-fossil fuel capacity target by 2030, creating a significant opportunity for Infrastructure Investment Trusts (InvITs) to unlock capital from operational renewable assets and fund the next phase of capacity expansion, Knight Frank India said in a report on Tuesday.
According to Knight Frank India's latest research study, India's non-fossil fuel capacity has increased fivefold from 59 GW in 2016 to 300 GW as of July 2026. The country needs to add nearly 200 GW over the next four years, implying annual capacity additions of around 50 GW. This would require annual investments of USD 48-54 billion, substantially higher than the current annual investment of USD 13-18 billion, the report said. With private developers accounting for more than 90 per cent of India's renewable energy capacity, capital recycling is becoming increasingly important. InvITs could provide developers with a mechanism to monetise operational assets, release capital and redeploy it into new renewable generation, storage and transmission projects. However, the opportunity remains largely untapped. Less than 2 per cent of India's operational renewable capacity has been monetised through InvIT structures, according to the report. Knight Frank noted that financing renewable energy projects in India remains nearly 80 per cent more expensive than in mature international markets, further strengthening the case for alternative financing mechanisms. "India's renewable energy journey has now reached an inflection point where financing innovation will be as important as capacity addition," Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said. Baijal added that InvITs could unlock capital embedded in operational renewable assets, reduce the cost of capital over time and accelerate investment into the next generation of renewable energy, storage and transmission infrastructure. Operational renewable assets could also offer an attractive income proposition to institutional investors. Backed by long-term power purchase agreements and predictable cash flows, successful renewable InvIT platforms have delivered cash distribution yields of around 10-10.5 per cent, the report said. Solar assets represent a particularly large opportunity. India has around 165 GW of installed solar capacity, with only 3 GW, or 2.3 per cent of operational utility-scale solar assets, monetised through InvIT structures. Knight Frank estimates that operational utility-scale solar assets worth around Rs 3.1 lakh crore could be eligible for InvIT structures. A deeper renewable InvIT market could diversify infrastructure financing beyond traditional bank lending and attract greater participation from pension funds, insurers and global infrastructure investors, while enabling developers to recycle capital into fresh capacity and supporting India's long-term energy transition. (ANI)
|
