Last week, India, the world's third largest carbon emitter, finally approved new targets for cutting global warming emissions, with the Union Cabinet approving new National Determined Contributions (NDCs), pledging to reduce the carbon intensity of its GDP (CO2 emissions per unit of GDP) over the next seven years from 2005 emissions per unit of GDP) by 45% over the next seven years, an increase of 10% from the previous target of 2016. In addition, India will also plan to meet half of its energy needs from renewable sources such as solar and wind by 2030, which is also a boost from the previous target of 40%, and the Indian government has said it will aim to achieve net zero emissions by 2070, a target that will take 20 years later than climatologists say.
Prime Minister Narendra Modi is understood to have announced the targets at UN climate talks in Glasgow last year, but they were never formalised and were only formally announced for adoption today.
A statement from the Indian government said, "The decision on strengthening the NDCs demonstrates India's commitment at the highest level to decouple economic growth from greenhouse gas emissions." The updated NDCs will now be submitted to the United Nations Framework Convention on Climate Change (UNFCCC).
It is understood that India's main focus in PV manufacturing is on module manufacturing. Recently India's Minister of State for New and Renewable Energy (MNRE) Bhagwanth Khuba recently claimed that India must become a global manufacturing hub for PV modules and not just a trader of PV modules in the country's government-initiated Aatmanirbhar Bharat (Self-Reliant India) initiative.
Last year, the Indian government launched the Production Linked Incentive (PLI) scheme to support the development of the domestic PV industry by manufacturing PV modules and related products. In April last year the Indian government approved a Rs45 billion Production Linked Incentive (PLI) scheme to increase domestic manufacturing capacity for PV modules. The Indian government has increased funding under the domestic PV cell and module manufacturing scheme to Rs240 billion in an effort to become an exporter of PV modules.
However, last week the RBI raised interest rates again or put the survival of renewable energy projects such as PV at risk.
On Friday, the RBI announced a 50 basis point increase in the benchmark repo rate, bringing the cumulative rate hike since May to 140 basis points. As a result, earnings from clean power projects financed in India over the past two years will be squeezed and some assets may not even be profitable.
Many respondents to a Bloomberg New Energy Finance survey believe that project developers financing clean power assets between 2020 and 2021 have failed to take into account the fact that interest rates on loans will soar. If this is true, an increase in debt costs of more than 100 basis points over the life of the project could result in PV projects not surviving while all other projects remain in operation, all other things being equal.
Post time: Aug-10-2022