Green energy: Potential to reboot and renew your portfolio
Authored by Abhinandan Tulsian, Fund Manager, Tulsian PMS
All of us, a lot of fund managers, are always on the lookout for that one stock or that one sector which will rake in the millions. When we go with a top-down approach, the hunt is always on for that sunrise industry, the one sector that will redefine all other ancillary sectors.
Here at Tulsian PMS, where we believe in quality research and independent analysis, Renewable or Green Energy is the sector which we believe is slated to grow by leaps and bounds. Let’s look at why we believe so.
The macro picture:
The renewable energy (RE) potential in India is 1000+GW (gigawatts) and the current installed capacity (as of Jun’23) is 176.24 GW, which includes hydropower too.
The following is the installed capacity for Renewables:
- Wind power: 41.9 GW
- Solar Power: 63.3 GW
- Biomass/Co-generation: 10.2 GW
- Small Hydro Power: 4.93 GW
- Waste To Energy: 0.52 GW
- Large Hydro: 46.85 GW
India’s global commitments, made at the COP26 climate conference in 2021:
- 500 gigawatts of non-fossil electricity capacity
- 50 per cent cumulative electric power installed from non-fossil fuel resources
- Reducing carbon emissions by one billion tonnes
- Reducing emissions intensity of its gross domestic product by 45 per cent.
- Government has set a deadline of 2030 to achieve all these targets as well as achieve net zero by 2070.
As we have been telling our members at Tulsian PMS, India is now a global leader in renewable energy with the third-largest production of RE in the world, fourth-largest installed wind power capacity, and fifth-largest installed solar power capacity.
The future phase of India’s RE development will be led by hybrid projects and renewable energy parks that will host solar and wind projects along with battery storage systems. To ensure industries across India get consistent and dependable power, solar and wind, power will be stored [via batteries] and made available on demand.
Gigantic macro opportunity:
The ambitious targets of India are themselves the biggest growth drivers - reduce India’s total projected carbon emission by 1 Bn Tonnes by 2030, reduce the carbon intensity of the nation’s economy by less than 45 per cent by the end of the decade, achieve net-zero carbon emissions by 2070.
Govt has approved setting up 59 solar parks of 40 GW across the nation. The government is also giving a push to Floating PV Projects.
The Union Cabinet approved the National Green Hydrogen Mission with a total initial outlay of Rs.19,744 crore, including an outlay of Rs.17,490 crore for the SIGHT programme, Rs 1,466 crore for pilot projects, Rs 400 crore for R&D, and Rs 388 crore towards other Mission components.
PLI scheme in Solar PV manufacturing with financial outlays of Rs 24,000 crore introduced under Atmanirbhar Bharat.
4 GWh Battery Energy Storage Systems supported through Viability Gap Funding
India offers a great opportunity for investments in the RE sector; USD196.98 Bn worth of projects underway in India.
Given India’s green hydrogen (renewable energy) production target of 5MMT per annum by 2030, India will require an electrolyser installation capacity of 27 GW – 30 GW and nearly 110 GW – 130 GW of renewable capacity. (Green hydrogen is hydrogen produced by splitting water by electrolysis, which is done by electrolyser).
The major RE players in the market are many but no one has the sheer size and operational efficiency as much as Adani Green. The others are – Siemens Gamesa, Azure Power, Tata Power, Solar Edge Tech, JSW Energy, NTPC, First Solar, Enel, Darling Ingredients, NextEra Energy, Brookfield Renewable and Enphase Energy.
Disclaimer: The opinions expressed above are personal and may not reflect the views of DSIJ