From Uttar Pradesh to Madhya Pradesh, the 'greening' of investor summits

Renewable power project proposals are beginning to make their presence felt in state investment meets

Sitting at his camp office two days before the state’s Global Investment Summit earlier this month, Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy told Business Standard, “For Andhra Pradesh, the major focus is on bringing investments in green energy — including renewable power, green hydrogen and pumped storage plants.”

Underscoring his words, investment proposals to the tune of around Rs 8.84 trillion were signed in the green energy sector, accounting for almost 68 per cent of the Rs 13.05 trillion that the meet attracted.

The major investors in the sector came from companies such as state-run power major NTPC, which signed three memorandums of understanding (MoUs) for investments amounting to Rs 2.35 trillion. Among others, Adani Green Energy signed two MoUs worth Rs 21,820 crore, Reliance Industries signed one MoU with an investment of Rs 50,000 crore and Renew Power lined up Rs 97,500 crore. The largest investor, NTPC, plans to develop a hydrogen ecosystem park at Pudimadaka, a 2.6-Gw pump storage power plant (PSP), and 20 Gw of renewable energy capacity.

To be sure, this is not Andhra’s story alone. In all recent state investor meets — whether in Uttar Pradesh, Madhya Pradesh or Karnataka — green energy has made its debut in terms of investment commitments. “Historically also, the majority of investments used to come from the energy sector. Earlier, it was oil and gas and power plants, now it is hydrogen and renewables. The new form is capex-heavy. It is the flavour of the world and not particular to India,” said Mohit Kumar, senior vice president, DAM Capital.

During its investors’ meet in February, Uttar Pradesh saw investment proposals worth Rs 33.5 trillion through 19,058 MoUs, out of which renewables fetched around Rs 4.47 trillion or over 15 per cent of the total proposals received. At least five of the top 10 investment proposals in the state came from renewables — including Rs 1.73 trillion by RG Strategies, Rs 50,000 crore by ABC Cleantech, Rs 42,280 crore by NTPC and Rs 41,500 crore by Unicorn Energy.

“The majority of our investments are coming in the form of solar energy and compressed biogas or CBG, with a few projects in green hydrogen and ammonia as well. UP has a good potential in solar energy and an agricultural base helps us in coming up with CBG units as well. In addition to this, promotion by the government of India and our sectoral policies are helping the sector,” said Abhishek Prakash, chief executive officer of Invest UP. The state has set a target to generate 22 Gw of solar power over the next five years, comprising 14 Gw from solar parks and 6 Gw from rooftop solar.

Industry analysts point out that the focus is part of the ambitious target by the country of becoming carbon-neutral by 2070. “The government has set out an extensive programme for renewable energy, multiplying the current capacity by around three times, in the next seven years. If you compare that with the hydrogen target, the total expected investment is to the tune of $400 billion,” said Vinay Rustagi, managing director of Bridge to India, a renewable energy focused consulting and research company. India is looking to achieve 450 Gw of renewable energy capacity by 2030, which includes 280 Gw of solar and 140 Gw of wind power. The country has also set a target of achieving 5 million tonnes of green hydrogen annually as part of the national green hydrogen mission.

According to Rustagi, “There is an increased amount of global capital now, which is focused towards energy transition and environment. Being one of the largest carbon emitters, India is a great market for them to invest,” he added.

The big question, of course, is how much of all these green investment commitments will materialise. Take Karnataka, for example. Out of the Rs 3.94 trillion worth of MoUs (of all varieties, not just green energy) signed in 2010, only 14 per cent was realised; in 2012, the strike rate came down to 8 per cent out of Rs 6.7 trillion; and in 2016, it was 15 per cent out of Rs 3 trillion. Other states have a similar story, which is why several are reluctant to reveal this data.

During Karnataka’s investor meet late last year, out of Rs 9.8 trillion worth of MoUs signed, Rs 2.83 trillion were already cleared, with a realisation of 29 per cent. Out of the total, around Rs 2.9 trillion came for manufacturing of green hydrogen and derivatives. The major investors in the state reportedly included ACME (Rs 51,865 crore), ReNew (Rs 50,000 crore, ABC (Rs 50,000 crore) and JSW (Rs 43,470 crore).

In the case of Madhya Pradesh, where the summit took place in January, out of investment proposals worth Rs 15.5 trillion, Rs 6 trillion came from renewables. “There is no guarantee that these commitments at state summits will fructify. For some elements it is very good optics both for the state government as well as investors. The fundamentals are very compelling for the sector and for India. This is also a great story for everyone to showcase,” Rustagi added.

This is an issue on which states such as Andhra Pradesh are focusing. “Immediately after the summit, we set up different committees to help the investors in rolling their project at a faster pace. We are also hand holding them at every point of clearances,” said K Vijayanand, special chief secretary, energy department.