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Will the Next Set of Multibaggers Come from Renewable Energy?
Mon, 10 Apr Pre-Open

Renewable energy has progressed from being an alternative to a conventional fuel source, to becoming a mainstream energy source. During 2017, India added 12.5 gigawatt(GW) of renewable energy capacity compared to 10.2GW capacity from conventional fuel sources.

India's energy resources are strained due to its sustained economic growth. India imports 80% of its oil needs. Lack of coal due to production and logistic constraints have increased dependence on imported coal. Thus, there's a significant risk of lesser thermal capacity being installed in the coming years severely stretching India's energy supply.

Demand on the other hand is steadily rising. Economic growth, growing per capita consumption, urbanization, are all likely to lead to a substantial increase in demand for electricity. Official peak deficits in the electricity sector are already around 12.7% which is expected to rise further in the future.

Currently, more than 50% of the population has no access to electricity. Others have to make do with poor and erratic supply of electricity.

Due to this demand-supply imbalance, huge quantities of diesel and furnace oil are being used for residential and commercial purposes. Kerosene is used in large quantities due to lack of lighting in rural areas. This in turn has resulted in higher dependence on oil imports as well as costs in the form of subsidies.

So the government is increasing its focus on renewable energy.

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In April 2002, renewable energy based installed capacity was 3.5 GW or 2% of total installed capacity in the country. It has subsequently increased to 42.8 GW (14% of total capacity) out of the country's total installed capacity of 300 GW.

Resultantly, companies in solar and wind generation space are expected to benefit. The recent upgrade in Suzlon Energy's credit rating signals that troubles for renewable energy stocks may be abating. Foreign investments in the sector have also been on a rise over the past few years.

The government has also taken steps to give a push for generation of renewable energy. It is trying to address key concerns related to squatters blocking high potential wind generation sites, delays in signing of power purchase agreements and timely payments to energy companies. It has charted a programme to achieve 175 GW of capacity addition by 2022.

My colleague Rahul Shah had discussed, in his 5Min Wrap Up Premium, the dynamics of the power industry are certainly set to change.

Therefore, companies with low cost of production and high plant load factors are likely to capitalize on the demand potential in the renewable energy sector. These companies can turn out to be a proxy play in the next phase of India's economic growth.

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2 Responses to "Will the Next Set of Multibaggers Come from Renewable Energy?"


Oct 25, 2017




Apr 11, 2017

Certainly Renewable energy SHLD perform very well if the specific aspects contained in your report are addressed by the GOI. With Mr Piyush Goyal heading this Ministry and being knowledgable and hard working ,he will certainly go for these goals.
Solar and Wind Power ,are two sectors of Renewables which the govt needs to concentrate, and it's doing that. The govt SHLD address closely some problems of power generators and distributors, so that Grid connectivity is good at all times ,and energy capability is fully utilised..from about RS 16 per unit that's One KWHR , ITS DROPEED TO ASLOW AS RS 2.98 / unit, that's the bidding in Madhya Pradesh recently for solar farms.
So we get clean power ,No pollution, and transmission losses also reduced.
If cos like Suzlon pick up well ,then we can achieve targeted GW PROJECTION IN WIND ENERGY TOO., SAY IN ABOUT SIX YRS TIME.
MR GOYAL SHLD GIVE FILLIP TO PRODUCTION OF WIND TUBINE ,BLADES ETC UPTO 3.5 to 4 Mw capacity in India itself. It would be cheaper, and more energy efficient. We have long coastline best to use it for wind power like Denmark,
Also make high tech solar panels in India ,by having close tie up with leading universities in usa ,and Europe to improve Photon conversion at lower costs of solar cells.

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Feb 21, 2019 03:35 PM