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Strong demand fuels investment in real estate and coal projects – Moody’s Ratings

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In Short:

India’s increasing power demand is boosting investment opportunities in the sector, particularly in renewable energy and transmission projects. Moody’s Ratings indicate that renewable energy and electricity transmission will drive investments in India’s power sector in the next 6-7 years. The country aims to achieve 500 GW of renewable energy capacity by 2030, requiring significant investment. Coal will continue to be a key player in power generation despite the growth in renewable energy.

Investment Prospects Brighten in India’s Power Sector

India’s power demand is on the rise, growing at a steady 10 per cent yearly rate. This surge in demand is fueling investment prospects in the sector, with a strong focus on renewable energy (RE) and transmission projects. According to Moody’s Ratings, RE and electricity transmission will be the key drivers of investments in India’s power sector over the next 6-7 years.

Stable Regulatory Environment

Despite the challenges, the stable regulatory environment and policy support are helping power companies navigate through the energy transition. This continuing support is vital for the sector’s growth and sustainability.

RE & Transmission Projects Driving Investments

India has set an ambitious target of achieving 500 gigawatts (GW) of RE capacity by 2030, requiring substantial annual capacity additions. To meet these targets, an estimated $190-215 billion investment will be needed over the next seven years. Additionally, around $150-170 billion will be required for electricity transmission, distribution, and energy storage to support the increasing renewable energy capacity.

Despite the financial strains on renewable power companies due to high leverage, the focus remains on meeting the growing energy demands sustainably. The investment in RE projects will be crucial in adding the necessary 310 GW of additional capacity over the next seven years.

Coal Continues to Play a Key Role

While there is a significant push towards renewable energy, coal will continue to be a vital source of electricity generation in India for the next 8-10 years. Despite the massive expansion in RE capacity, coal-based power generation will remain pivotal to meeting the growing power demands.

Moody’s predicts that India will add 40-50 GW of coal-based capacity in the next five to six years to cater to the increasing power demand, projected to grow by 5-6 per cent annually. This diversification in the energy mix helps mitigate risks and ensures a reliable power supply for the country.

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