As the climate crisis intensifies and extreme weather events batter the Indian subcontinent, India is confronting the urgent need for a green transition.
With ambitions to significantly increase its renewable energy capacity, the country faces the colossal challenge of financing this ambitious endeavor. Prime Minister Narendra Modi, attending COP28 in Dubai, has underscored India’s commitment to becoming energy independent by 2047 and achieving net-zero carbon emissions by 2070. A pivotal aspect of this strategy is the National Green Hydrogen Mission, aiming to position India as a major green hydrogen producer.
Green hydrogen, produced through electrolysis using electricity from renewable sources, is at the forefront of India’s energy revolution. The fuel holds promise for various sectors, including transport, steelmaking, and fertiliser production, crucial components of the Indian economy. Despite its nascent stage, the Indian government envisions producing at least 5 million tonnes of green hydrogen annually by 2030, with an initial budget exceeding US$2.5 billion for incentives, research, development, and infrastructure.
Indian power company JSW Energy is spearheading the green hydrogen movement, constructing its first plant with a capacity of about 4,000 tonnes. This venture marks India’s most extensive commercial green hydrogen project to date, with plans for a second plant 20 times larger already in the pipeline. Pritesh Vinay, JSW Energy’s Director for Finance, sees India as poised to become a global green hydrogen player, citing favorable government policies and industry collaboration as catalysts for a substantial opportunity.
India’s push to achieve 500 gigawatts of renewable energy capacity by 2030 necessitates active participation from the private sector. Initiatives like Modhera, India’s first solar-powered village in Gujarat, showcase successful collaborations between central and local governments, paving the way for sustainable models across the nation. Start-ups like Oorjan Cleantech are facilitating the green transition by providing financing solutions, leveraging partnerships with banks and private investors to fund renewable projects.
While India races towards its renewable energy targets, the need for substantial financing becomes evident. Analysts estimate that achieving the 500 gigawatt target will require over US$300 billion in investment, demanding innovative financing structures and exploring alternate pools of capital. Prime Minister Modi has consistently called on developed nations to contribute at least 1% of their GDP to climate finance, emphasizing the financial challenges faced by developing nations.