In addition, India’s solar sector is expected to experience significant growth after the pandemic, with solar PV power generation set to overtake coal by 2040, EY said in a statement.
This radical change was motivated by the political ambitions of the Indian government, which has led solar PV to be the most cost-competitive source of energy in the region and to improve over time, he said. he adds.
The observations comply with EY’s 57th Renewable Energy Attractiveness Index (RECAI) published by EY worldwide.
In 2020, global investments in renewable energy capacities increased by 2% to reach 303.5 billion USD, the second highest annual figure recorded to date despite the impact of the pandemic, he said. declared.
However, EY RECAI 57 estimates that future development to achieve net zero will require an additional investment of USD 5.2 trillion and highlights the role of institutional investors in financing the energy transition.
RECAI 57 notes that environment, sustainability and governance (ESG) objectives are increasingly high on the investor agenda as institutional investor interest in renewable energies continues to grow.
“India has moved one position above (3rd) the previous index (4th), this is mainly due to the exceptional performance on the solar PV front. Solar PV installed capacity in India has soared to 39 GW, slightly exceeding wind capacity for the first time, ”said Somesh Kumar, Partner and Country Leader, Energy and Utilities, EY India.
The economic attractiveness of solar PV and intense competition from the private sector has led to record price offers, Kumar added.
India also pledged to put in place 450 GW of renewable (installed) energy capacity by 2030 at the recent climate summit hosted by the United States.
This will likely increase the share of renewables in overall installed power generation capacity to 54 percent, compared to the share in overall gross generation to 36 percent, he estimated.
The upcoming United Nations Climate Change Conference of the Parties in 2021 (COP26) provides an opportunity to bridge the gap between what governments have pledged to do and the level of action they have taken to date.
RECAI 57 finds that current policy and engagement trajectories of key countries indicate increased commitment to increased accountability and transparency, with representatives expected to present clear roadmaps and details of policy measures. to stimulate investment in renewable energies.
Ben Warren, head of corporate finance for EY Global Power & Utilities and editor-in-chief of RECAI, said the impact of the pandemic on economies around the world appears to have refocused the minds of investors on the agenda. of environmental, social and corporate governance and that there is a growing tendency to take the climate into account. crisis and energy transition during the deployment of capital.
“As a result, interest in developing renewable energies has increased among institutional investors who are committed to integrating climate risk concerns into their decision-making processes, resulting in new investment models. to locate opportunities that meet their expectations for risk and return, ”said Warren added.
The United States retains the top spot on RECAI 57 and is expected to retain its position under President Joe Biden, he said.
The re-acceptance of the Paris Agreement, combined with the recent announcement to reduce greenhouse gas (GHG) levels from 50 to 52% by 2030 and to reach 100% carbon-free energy by 2035 , will likely lead to increased investment interest in the United States, he added.
Likewise, China has remained a buoyant market and maintains the second position, adding 72.4 GW of new wind power in 2020, as developers rushed to beat a reduction in onshore wind subsidies, he said. declared.
In April, China and the United States also announced that they would work together and with other markets to tackle climate change.