India takes lead in clean energy investments growth

February 03, 2012
Solar panel array lineup

Clean energy investments in India in 2011 was the highest growth figure of any significant economy in the world topping out at USD10.3 billion in 2011, up 52 percent from the USD6.8 billion recorded in 2010.

According to new data released yesterday by Bloomberg New Energy Finance (BNEF) India's portion of global investment in clean energy was four percent of the global total, driven largely by a seven-fold increase in funding for grid-connected solar projects which jumped from USD0.6 billion in 2010 to USD4.2 billion in 2011. Wind investments were slightly higher at USD4.6 billion.

Asset financing for utility-scale projects remains the main type of clean energy investment in India, with USD9.5 billion in 2011. This is significant as the higher lending rates observed over the past year could have negatively impacted asset finance, according to BNEF.

Venture capital and private equity investment also made a strong comeback with USD425 million invested in 2011, more than four times the 2010 figure. Wind and solar project developers such as Mytrah Energy India and Kiran Energy Solar Power succeeded in doing deals.

The only major type of investment that fell in 2011 was equity-raising via the public markets. Only USD201 million was raised compared to a record USD735 million in 2010 when the Indian stock market was at its all-time high.

The wind sector added a record 2,827 MW of capacity in 2011 compared with 2,140 MW in 2010. This kept India at the third rank globally in terms of new installations, behind China and the US.

It is estimated that another 2,500 MW to 3,200 MW of wind capacity could be added in 2012. A substantial increase in grid-connected solar capacity was also observed, up from 18 MW in 2010 to an estimated 277MW by end of 2011. In 2012, another 500-750MW of solar projects could be added.

Ashish Sethia, head of India research at BNEF, said: "There was concern at the beginning of last year that increasing lending rates might hit investment. Policy measures like the Jawaharlal Nehru National Solar Mission, and renewable energy's increasing cost competitiveness, have made this a record year."

Michael Liebreich, chief executive of Bloomberg New Energy Finance, said: "India's record performance in 2011, and the momentum it is carrying into 2012, is one of the bright spots in the clean energy firmament. With support mechanisms falling away in the US, the ongoing financial crisis in Europe, and China already going flat out, it is gratifying to see some of the world's other major potential markets coming alive. India is firmly in the lead group and we are seeing interest around the world in being part of what is unfolding there."