Solar's Hot in India. It's About to Get Hotter...

India, with its booming economy and massive population of over 1.3 bn, has always faced shortage of energy. Despite being one of the world's top power producers, the country is not able to fulfil the needs of its fast growing population.

Presently, India's energy requirements are met with coal. According to media reports, going ahead, it is assumed that the coal reserves of the country will not last beyond 2050.

Now it's high time India moved to renewable ways to feed its population its fair-share of electricity.

Solar energy has emerged as India's most practical and environment friendly alternative for meeting all of its energy needs.

By 2022, India wants to produce 100 gigawatt (GW) of solar energy. Such a large undertaking may appear to be a mammoth effort at first.

On the other hand, the country's long-term energy targets may not be too tough to attain. India expects to reach 450 GW of renewable energy capacity by 2030, with solar energy accounting for around 280 GW.

Due to the country's geographical position and topography, solar power has a significant potential in the country. This offers the country a competitive advantage over other countries.

To achieve this goal, some of India's prominent players are making multiple efforts in the field of solar energy.

Let's find out the reason why solar space is getting hotter day by day...

Reliance Industries' bold plan to move into the clean energy space

Five years after disrupting the telecom space with the launch of Jio, Reliance Industries (RIL) announced yet another game changing move - a mega entry into green energy.

Under its 'New Energy and New Materials' branch, the corporation plans to expand into solar power generation and manufacturing, hydrogen production, e-fuels, and energy storage.

It will also set up a platform for renewable energy project finance to source long-term global capital for investment in these sectors.

The three-pronged plan will cumulatively involve an investment of Rs 750 bn over three years, Mukesh Ambani, chairman, Reliance, announced during its annual general meeting (AGM).

The green energy plan

Under the plan, Reliance will set up a Dhirubhai Ambani Green Energy Giga Complex, spanning 5,000 acres, in Jamnagar, Gujarat, at Rs 600 bn while another Rs 150 bn will be invested in value chains, partnerships, and future technologies, including upstream and downstream industries.

The company will create a capacity of producing solar power of 100 GW in 10 years. The ambition is stunning as India's installed capacity of solar power is now 40 GW (including ground mounted and rooftop).

Reliance Industries will set up four giga factories for integrated solar photovoltaic modules, advanced energy storage, an electrolyser factory for green hydrogen, and a fuel cell factory for converting hydrogen into motive and stationary power.

Competition from established players

This move has made Reliance Industries to directly compete with the Adani group.

Adani Solar has 3.5 GW of annual solar photovoltaic production capacity while Adani Green Energy has a portfolio of 25 GW of commissioned and under construction projects.

Recently, Gautam Adani, chairperson of Adani Group, sealed the largest deal in India's renewable sector with acquisition of SB Energy for US$3.5 bn.

While, Tata Power Solar, subsidiary of Tata Power is consistently expanding its horizons in solar power play.

Earlier this month, Tata Power Solar, one of India's largest integrated solar companies has received Letter of Award (LoA) to build 100 megawatt (MW) of distributed ground mounted solar projects for Energy Efficiency Services.

Also, the firm has a portfolio of more than 7 GW of ground-mount utility-scale, and over 615 MW of rooftop and distributed generation projects across the country till date.

India to reduce the dependency on China

India's solar story is largely dependent on procurement of raw material from China.

However, India is currently ramping up the manufacturing of solar panels and cells.

It has been one of the major countries that have really made very serious efforts to meet the carbon emission target it has proposed.

The efforts of the government over a period of time have been effective in finding alternatives to fossil fuel. The country is very optimistic to meet its net-zero carbon emission.

Ahead of the convention on climate change conference of the parties (COP26), India is on track to achieve the goals of renewable energy enshrined in the Paris Agreement and it has been well noted by other countries.

India imports close to 90% of its solar cells and module requirements. 80% of this is from China. According to the industry data, India has 3,100 MW of cell manufacturing capacity and 9,000 MW of module manufacturing.

The Union government early this year announced the production-linked incentive scheme for solar photovoltaic panels manufacturing in India. The Rs 45 bn scheme aims at creating an additional 10 GW capacity of integrated solar PV manufacturing plants in the country.

Should you invest in renewable energy sector?

India's nascent renewable sector is full of opportunities and is constantly growing.

Companies in this industry are working together to help transition India's economy away from fossil fuels such as oil and natural gas.

Also, there is a massive scope of technological progress within the industry. New technologies are being invented to reduce the effective cost of installation, so that more people, even in the rural areas, can afford renewable energy sources.

As more investment flows into the industry, this could be one of the hottest areas of the market over the next decade.

Investors hoping to profit from India's renewable growth should look into the financials, management, business strategy, and all other fundamental factors of the companies before investing in them.

For more detailed updates, read our power sector report and check the latest power sector results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...