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India's clean energy shift holds $25 bn potential, reports Avendus Capital study

India's energy transition landscape provides a $25-billion, or about Rs 2 lakh-crore, annual investment opportunity for investors, led by green hydrogen, energy storage, electric vehicle charging, carbon capture and utilisation, and energy efficiency, a study by Avendus Capital has said.

The investment banking firm unveiled the research report in collaboration with Clean Energy Pipeline, an independent research firm based in the UK. "Over the last few decades, any mention of the cleantech sector has become synonymous with renewable power producers," Prateek Jhawar, managing director of Avendus Capital, said. "The fact is that only 20% of final energy consumed is in electrified form. Investments in decarbonisation of the balance 80% share will require participation from a multitude of players in addition to renewable power producers and its current ecosystem."

Despite the global economic slowdown, investment interest in the Indian energy transition sector swelled in 2022 and will continue to be at the forefront of global decarbonisation efforts, said Jhawar who also heads infrastructure and real assets investment banking at Avendus.

As part of the study, Clean Energy Pipeline conducted a survey to gauge global investor interest in India's clean energy industry, which garnered over 2,000 responses. It indicated that high economic growth and a stable commitment to decarbonisation have drawn the attention of major organisations and investors around the world.

The report also interviewed some companies and investors that participated in the survey, including SUSI Partners, Actis, ABB, and Ikigai Capital.

Avendus believes green hydrogen will be the next big wave in energy transition globally, while green ammonia will provide viable end-use in the short term. "We believe green hydrogen, energy storage, EV charging, carbon capture and utilisation, and energy efficiency are the segments that will create a mark for themselves over this decade," said Akhil Dokania, director, infrastructure and real assets investment banking, at Avendus Capital.

While grid load management is critical, the firm expects investments will go into both pump storage hydro and battery-based storage projects. EV charging infrastructure will require large-scale investments to support the growing EV penetration in India, it said. Carbon capture, utilisation and storage industry is still in its nascent stages; commercially viable business models will have to be developed for it to become an attractive investment proposition, the report said.

"Indian companies are coming up with service-oriented solutions for energy delivery as well as management, which further creates a significant value creation opportunity for early investors in the emerging energy transition segments," Dokania said.

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