More than US$250 billion will be invested in renewable power generation and transmission in India over the next five years, a figure that could reach $1 trillion by 2030, according to the country's power minister.
Piyush Goyal said that by 2022 India plans to have added 225 gigawatts of generating capacity from renewable energy sources, including solar, wind, hydro and biomass.
"Largely it will be financed through a mix of debt and equity through commercial banks, but we do believe that the developed world has obligations to fulfil," Mr Goyal said at the World Future Energy Summit in Abu Dhabi.
Developed countries have pledged $100bn annually by 2020 to support climate change efforts in developing countries as part of the Paris Agreement on climate change, which came into effect last October.
Over the past two years foreign direct investment in India’s electricity sector was $1.32bn, but Mr Goyal said that the cost of these projects cannot fall entirely on the private sector. He said the public sector must also “play a proactive role to bring down the cost of financing”.
The Indian government has approved infrastructure investments trusts (invITs) and is working with the state-owned Power Grid Corporation to divest assets in order to shore up capital for expansion. InvITs are a type of income trust that is created to finance, construct, own and operate and maintain infrastructure projects.
“Once that comes into play, we could look easily at $10bn coming into the infrastructure investment trusts on the transmission side,” Mr Goyal said.
The UAE in 2014 signed a memorandum of understanding to help spread solar and wind power in India. Firms including Abu Dhabi’s Masdar are looking to go in this year. “The Indian subcontinent is very interesting to us, we’ve been watching it for the past two years,” Mohamed Al Ramahi, Masdar’s chief executive, said in a recent interview.
The UAE is the Arab world’s largest investor in India. Its $8bn invested in 2014 accounted for 81.2 per cent of total regional investments in the country, mostly in construction and energy.
In 2015 the UAE and India established a $75bn infrastructure investment fund focused on railways, ports, roads, airports and industrial parks.
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