India’s renewable energy revolution gains momentum: IPOs set to accelerate transition from fossil fuels to green future

Between 2022 and 2023, the installed capacity of renewable energy sources (excluding hydropower) increased by 12.20%, while that of thermal sources increased by 0.49%.

This trend indicates that India is changing its energy landscape, with renewable energy sources gaining an increasingly important role in the country’s power system.

Moreover, energy consumption in India has doubled in the last two decades and is predicted to increase by at least 25% by 2030.

According to Bhupinder S. Bhalla, secretary, Ministry of New and Renewable Energy (MNRE), India’s total energy imports currently stand at $90 billion annually, which is nearly 40% of primary energy.

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Taking these factors into account, the role of renewable energy sources in reducing dependence on non-renewable resources becomes even greater.

Despite these challenges, India’s progress in renewable energy has been impressive.

Thanks to strong government policies, a growing domestic market and an increasing number of qualified professionals, the country has become a world leader in the implementation of renewable energy sources.

In January this year, the International Energy Agency (IEA) said India is expected to account for almost half of the world’s additional renewable energy capacity by 2026.

This growth is being driven by India’s ambitious renewable energy targets, which aim to generate 40% of its electricity from renewable sources by 2030.

India’s accelerated transition to renewable energy

According to a report by the Indian Brand Equity Foundation, as of March 2024, thermal power generation accounts for 56% of India’s total installed electricity generation capacity, while renewable energy sources (RES) and hydropower account for 32% and 11%, respectively. Nuclear power accounts for just 2% of the total capacity.

Over the years, there has been a decline in thermal capacity from 63.3% in 2008–2009 to 56% in 2023–2024, as well as a reduction in hydropower capacity from 25% to 11%. Renewable energy capacity has increased significantly from 8.9% to 32% in the same period.

The average annual growth rate (CAGR) of total installed electricity generating capacity during the period 2009–2023 was about 7.7%, with growth in renewable energy at 17.4% and other sources at 5.7%.

India’s energy sector is undergoing a major transformation, moving away from fossil fuels towards renewable energy sources.

Renewable energy capacity (excluding hydro) increased by 12.20% during 2022-23, while thermal capacity saw a moderate increase of 0.49%. This change underscores the evolving energy landscape in India, with renewable energy sources playing an increasingly important role in the country’s power grid.

In the renewable energy sector, solar energy dominates with a share of 53.4%, followed by wind energy with 34.1%, bioenergy and waste-to-energy with 8.2%, and small hydropower projects with 3.9%.

During fiscal year 2023-24, engineering and infrastructure firm Larsen & Toubro (L&T) completed various projects, including electrification of over 3,400 kilometers of mass transit systems, commissioning 2.2 gigawatts of solar power, developing 6.2 gigawatts of nuclear power, building 3.5 gigawatts of hydropower plants and constructing 14.8 million square feet of eco-friendly buildings.

At L&T’s 79th annual general meeting, new CEO SN Subrahmanyan announced plans to invest $12 billion over the next five years, a third of which will be earmarked for green energy initiatives.

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As part of this commitment, L&T intends to invest approximately $2 billion in its first green hydrogen project, which aims to achieve a production capacity of 2-3 million tonnes of green hydrogen and ammonia, with a total investment of nearly $4 billion.

On July 5, Damodar Valley Corporation (DVC) announced that it plans to invest Rs 20,000 crore by 2030 to install solar panels with a total capacity of 4,000 MW, a top official said.

He added that the company, set up to control floods and develop the Damodar Valley, envisages investments of Rs 50,000-60,000 crore by 2030 to improve thermal power plants, pumped storage power plants and solar power. It aims to add close to 10,000 MW of thermal and green energy, taking the total installed capacity to about 16,700 MW. Of DVC’s current installed capacity of 6,700 MW, 6,540 MW is thermal power.

Renewable energy, once considered a niche market, is now emerging as a key energy source in India.

The sector’s growth is underscored by the strong performance of green energy stocks. Over the past year, companies such as Inox Wind Energy and KPI Green Energy have seen significant returns of 450% to 500%, according to the stock giant.

More than 15 other renewable energy stocks also posted returns in excess of 100%, according to the report.

While current renewable energy stock valuations may seem high, the sector is poised for continued growth and innovation.

Leading Indian companies are increasingly focusing on sustainable initiatives to capitalise on the renewable energy boom.

The upcoming initial public offerings of five renewable energy companies are expected to further boost activity in the renewable energy market.

NTPC

NTPC Green Energy, a wholly owned subsidiary of NTPC Limited, India’s largest energy company, is focused on accelerating NTPC’s renewable energy growth and expanding its green footprint both domestically and potentially internationally. NTPC Green Energy Ltd (NGEL) recently selected investment bankers for its listing.

The company plans to build a 60GW renewable energy portfolio over the next decade, using the proceeds from the share sale to expand its non-fossil fuel businesses. The initiative supports the government’s goal of achieving net zero carbon emissions by 2070.

According to an ET NOW report, NTPC Limited, the state-owned power generation company, is planning to float an IPO of NTPC Green Energy worth Rs 8,500 crore in September. NTPC Green, with a current operational capacity of 3.4 GW and a pipeline of 26 GW (including 7 GW under development), is a 100% subsidiary of NTPC.

Earlier, a PTI report said that NTPC Limited has received approval from the Department of Investment and Public Asset Management to conduct a public offering of its green energy business.

The company aims to raise up to Rs 10,000 crore through a public issue. This IPO will be the largest PSU IPO since LIC’s Rs 21,000 crore IPO that debuted in May 2022.

Green ONGC

Oil and Natural Gas Corporation (ONGC), India’s largest oil and natural gas company, has incorporated a wholly owned subsidiary of ONGC Green on February 27, 2024. ONGC Green operates across energy value chains, including renewable energy, biofuels/biogas, green hydrogen and its derivatives (such as green ammonia and green methanol), energy storage, carbon capture, utilization and storage, and LNG.

In March, ONGC approved an equity investment of Rs 990 million in ONGC Green, while its board also gave preliminary approval for an additional investment of Rs 11 billion. The company plans to expand beyond India, exploring opportunities in international renewable energy markets.

ONGC Green is expected to leverage ONGC’s existing infrastructure and expertise to efficiently develop and manage projects in the renewable energy sector. These factors position ONGC Green as a potential game changer for the Indian market.

While there have been no official announcements regarding an IPO, the company may consider such plans in the near future.

NHPC Renewable Energy Sources

NHPC Renewable Energy, a subsidiary of NHPC Limited – India’s largest hydropower producer – focuses on developing and managing renewable energy projects, primarily solar and wind. The company is committed to expanding its renewable energy portfolio, with over 1,300 MW of solar projects in the pipeline.

Earlier this year, NHPC announced plans to increase investment in renewable energy sources. The company aims to allocate 80% of its total capex to the hydropower sector and 15-20% to the solar and hybrid green energy sectors by the end of fiscal 2027, boosting the growth prospects of its subsidiary.

According to Rajendra Prasad Goyal, director of NHPC, NHPC plans to either list NHPC Renewable Energy on the stock exchange or sell its stake to strategic investors through a private placement in the next two to three years. While no details about the IPO have been disclosed, NHPC is focused on increasing its renewable energy capacity in the future.

NLC India Green Energy

In October 2023, NLC India, a Navaratna Central Public Sector Enterprise (CPSE) under the Ministry of Coal, has set up a wholly owned subsidiary called NLC India Green Energy Limited (NIGEL). This subsidiary is responsible for planning, bidding for upcoming renewable energy tenders and bidding, executing and commissioning renewable energy projects. NIGEL aims to achieve a capacity of 5 GW by 2030 and contribute to reducing carbon emissions.

NIGEL has signed a Power Purchase Agreement (PPA) with Gujarat Urja Vikas Nigam Limited (GUVNL) for the proposed 600 MW solar power project at Khavda Solar Park in Gujarat. The project is expected to offset about 35.5 million metric tons of carbon dioxide emissions during its lifetime and will be the single largest solar project developed by NLCIL till date.

NIGEL has set an ambitious target of deploying 6 GW of renewable energy projects by 2030. In line with this target, projects with a total capacity of 2 GW are currently under implementation across various regions of India.

While there have been no official announcements regarding an IPO, there is a possibility of one in the near future.

SJVN

SJVN Green Energy, a wholly owned subsidiary of SJVN, a Mini Ratna public sector undertaking under the Ministry of Power, Government of India, focuses on renewable energy generation. These include solar parks, wind and hybrid projects, battery energy storage systems, and ventures in wave, biomass, small hydro and green hydrogen.

In April 2024, SJVN Green Energy formed a joint venture company with Assam Power Distribution Company named SGEL Assam Renewable Energy Limited issued by the Ministry of Corporate Affairs, Government of India.

This joint venture will focus on generating energy from all renewable energy sources, including hydropower, by building power plants.

In March, SJVN Green Energy was awarded a 200 MW solar project in the e-Reverse Auction conducted by Gujarat Urja Vikas Nigam, with an estimated construction and development cost of Rs 11 billion. The company also received a letter of intent for a 500 MW solar project at Gujarat Industries Power Company Park in Khavda, with an investment of Rs 27 billion.

SJVN Green Energy currently has 3.6 GW of assets in its pipeline, which are expected to come online in the next two years. While no official announcement has been made about an IPO, the company plans to invest around Rs 15 billion in expanding its renewable capacity and may consider listing on the stock exchange soon.