Business / Industry Sectors
Clean Technology – Current Status and Opportunities in India
06/10/2013
India accounted for 4 percent of global investment in clean energy, and sixth among the world’s 20 leading economies in attracting funds to build clean energy infrastructure

India’s clean technology investments, has reached $10.2 billion in 2011, some 52 percent higher than the $6.8bn invested in 2010. This was the highest growth figure of any significant economy in the world. There is plenty of room for further expansion in 2012-2013, India accounted for 4 percent of global investment in clean energy. India ranks sixth among the world’s 20 leading economies in attracting funds to build clean energy infrastructure. The Jawaharlal Nehru National Solar Mission has encouraged investments close to $ 4.2 billion in converting sunlight to electricity almost two-fifths of the $10.2 billion the country invested in renewable energy in 2011. India’s clean energy sector half of which consists of the wind energy grew the second fastest in the past year. 

Policies

From a policy standpoint, there is a genuine push towards clean energy, across wind, solar, hydro and bio. Grid-connected renewable capacity in India stood at 22 gigawatts (GW), comprising 11% of total power generation in the country, with 2.8 GW of wind capacity added in 2011 alone. Solar capacity is on the rise due to both the Nehru Solar Mission as well as several state-level initiatives. The 12th Five-Year Plan aims to install 18.5GW of renewable energy.

There is opportunity across the entire supply chain, not just on the generation front. The immediate prospect lies in addressing the challenge in the transmission and distribution losses, estimated to be close to 30% due to sub-standard grid infrastructure and pilferage. Energy efficiency is another sector that holds tremendous potential. Also, the fact that all large consulting firms have set up sustainable building or infrastructure business units indicates that they see cleantech as an engine of growth.

The grant-in-aid scheme on development and Promotion of Clean Technology was initiated in 1994 with the following objectives:-

1. Development & Promotion of Cleaner Technologies.

2. Development of tools and techniques for pollution prevention.

3. Formulation of Sustainable Development Strategies

Since the inception of the scheme in 1994, important activities undertaken so far include

  • Carrying Capacity Studies in various parts of the country namely Greater Kochi Region, Doon Valley, Damodar River Basin, Tapi Estuary and National Capital Region (NCR) by National Environmental Engineering Research Institute (NEERI) Nagpur
  • Natural Resource Accounting Studies for Yamuna Sub-Basin by National Environmental Engineering Research Institute (NEERI)
  • Life Cycle Assessment (LCA) Studies in Thermal Power Plants by Indian Institute of Environment Management, Navi Mumbai
  • Live Cycle Assessment for Steel Sector by National Metrological Laboratory, (NML) Jamshedpur
  • Pulp and Paper Study by Indian Agro and Recycled Paper Mills Association (IARPMA), Delhi
  • Life Cycle Assessment for Cement Sector by National Council for Cement and Building Materials Ballabgarh; and Other pollution prevention and waste utilization and management studies.

Demand and Prospects

India, one of the world’s fastest growing economies, presents lucrative opportunities for companies that offer products and services in the clean technologies industries. India is seeking to diversify and grow its energy sources and reduce carbon emissions in the context of sustained economic expansion. With the rapid growth of the Indian economy, the demand for clean technologies in the country is rising exponentially, and the development of renewable energy resources and deployment of environment technologies that reduce greenhouse gas emissions is a high priority for the Government of India.

India generated a record of 2.827 GW in wind power, making it third (behind China and the US) for new installations globally in 2011. Grid-connected solar power climbed from just 18 MW in 2010 to 2.777 GW in 2011. Energy Finance estimates that 2,500MW to 3,200MW of wind capacity could be added in 2012.

 

Renewable Energy: The Indian renewable energy market is estimated to be worth over $17 billion and is growing at an annual rate of 15%. Wind, hydro, solar, biomass, and waste-to-energy all have huge potential. Only 19,973 MW of total renewable energy potential estimated at 200,000 MW has been tapped in India thus far leaving a huge opportunity for potential future market growth.

To keep its economic growth at its current pace, India needs to add 150 GW of power capacity at an investment of $200 billion over the next five years. The Government of India (GOI) wants to tackle the existing shortfall in the energy supply increasingly through the generation of renewable energies. India today stands among the top four countries in the world in terms of renewable energy capacity and it offers some attractive incentives in this area.

Wind: Companies can take advantage of India’s wind energy market, which is one of the world’s largest as India imports wind turbines, windmill blades, wind battery chargers, wind energy converters etc.

Hydro: The hydropower generation potential for India is 300,000 MW out of which only 145,000 MW can be exploited due to limited resources and difficult geographical terrain. The GOI has firmed up an investment of $20 billion for the development of hydro projects by 2020.

Biomass: The GOI announced a target of creating 10,000 MW of biomass power generation by 2020 and will shortly release a biomass power policy to chart out a roadmap for supporting biomass generated power.

Waste to Energy: The GOI has developed a National Master Plan for Development of Waste to Energy in India. The GOI estimates that the potential to generate power from municipal solid waste will more than double by 2020, while the potential from industrial waste is likely to increase by more than 50%. In a country with high population density and limited landfill capacity, waste to energy power generation is a major priority.

Solar: India has embarked upon a $19 billion plan to produce 20GW of solar power by 2022.

Energy Efficiency: The market potential for industrial energy efficiency products and services is projected to be approximately $27 billion in 2018; the potential for green buildings was estimated to be over $3 billion in 2011.

Smart Grids: At present the smart grid market in India is at a nascent stage but is projected to grow rapidly with plans to install several million smart meters in the next few years.

Green Buildings: India has emerged as one of the world’s top destinations for green buildings and has implemented a number of home-rating schemes and building codes, which open up a wide range of opportunities for companies in the energy efficiency sector.

The concept of green building development in the country has witnessed a sustained momentum despite the overall weakening macroeconomic environment, witnessed in 2009. The supply of green space has been contributed by various industrial segments but IT/ITeS sector contributed the maximum at 58 per cent of the total supply in the country.

Environmental Technologies: The environmental technologies market in India is estimated at approximately $9 billion per year with an annual growth rate of 15%. Growing environmental consciousness, increasing compliance and enforcement of environmental legislation, the availability of finance and rising domestic demand due to the rapid growth in urban population has led to the deployment of clean technologies in the country. The Indian Government has initiated many new projects for improving environmental conditions and reducing pollution ($12.4 billion is reserved for improvement of waste management, development of urban areas, water and sanitation, etc., in 63 cities nationwide.) The booming Indian economy, rapid industrialization, and urbanization have all contributed to severe environmental damage which creates opportunities for firms that can offer technology solutions to these challenges.

Water and Waste Water Management: The Indian Water Resources Ministry plans to invest $50 billion in the water sector over the next 5 years.

  • The $1.2 billion Indian water and waste water treatment market is expected to grow at a rate of over 10% in the next few years.
  • The U.S. accounts for over 40% of the total Indian imports into this sector.
  • The current market for industrial and waste water treatment is estimated at $640 million and drinking water purification at $425 million. Both sectors are expected to witness tremendous growth in the near and medium-term.
  • The $280 million bottled water market is expected to reach $600 million by 2012.
  • The $40 million market for packaged waste water treatment plants is expected to reach $60 million by 2013.

 

Clean Coal Technologies: India is making significant effort in adopting international technology and adding new clean coal infrastructure in the three categories of coal beneficiation, coal combustion and coal conversion.  Indian coal is predominantly low grade and high in ash contents.  India is targeting a coal beneficiation capacity of 810 million tons by 2025, an eight-fold increase from the current installed capacity.  Improved coal combustion technology upgrade efforts include supercritical boiler technology and Integrated Gas Combined Cycle (IGCC) using synthesis gas for thermal power plants.  Coal conversion technologies being targeted are underground coal gasification and coal to liquid projects.  Additional focus areas are capturing methane from coal bed/coal mine/ventilation air for commercial exploitation.  The GOI is collaborating with several international agencies and countries to explore the best available technology options in each of the areas.

 

Recent Initiatives

The European Business and Technology Centre (EBTC), an agency co-funded by the European Union (EU) for promoting clean technologies in India, will facilitate establishing 30 projects in the country in the near future. The EBTC has around 25 to 30 projects in the pipeline which will come up in the near future. The Indo-European projects will be in biotechnology, energy, environment and transport sectorsThe EBTC assists the business, science and research communities in Europe and India to work together towards generating new business opportunities in clean technology transfer.

The growth rate in biotech, energy, environment and transport sectors is much higher than India's GDP (gross domestic product) growth rate. The growth is much higher in pockets. This offers huge opportunities that can be utilized. Also, India is among very few economies which have been able to register a sustained growth.

With Government policies and incentives in place for renewable energy, the number of private equity investments in the clean technologies sector is increasing. There were five deals in the clean technologies space in January-March 2011 quarter; ten in the April-June 2011 quarter and 14 deals in the July-September 2011 quarter. The amount invested in the July-September quarter was $359 million compared with $176 million in the immediate previous quarter.

The investment deal follows a series of investments into the clean technologies space. Goldman Sachs invested $204 million in start-up renewable energy firm, ReNew Wind Power in September 2011, This was one of the biggest private equity deals in the clean technologies space in India. Prior to this, FE Clean Energy invested $40 million in NSL Renewable Power in July 2011. IDFC Project Equity invested $112 million in Caparo Energy India in June 2011. Baring India invested $90 million in Cethar Vessels in December 2010.

Investing in the clean technologies space requires a great degree of specialization. These investments have a long gestation period and a different returns profile.

 

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