The Green (Energy) Revolution

Recently, one of India’s biggest names in green energy touched the ₹3 lakh crore mark. Can you guess which company this is?

Read on to find out!

With strict net-zero targets set by the government, the Budget ‘22 comes almost at an opportune moment for the Indian renewable energies sector. 

At the recently concluded CoP26 summit in Glasgow, Scotland, PM Narendra Modi declared a five-fold strategy – the ‘Panchamrita’ – to achieve net-zero carbon emissions by 2070. He received immense praise from the Chair of the Grantham Research Institute at London School of Economics and staunch climate advocate, Lord Nicholas Stern, for the same. 

Following were the five main points – 

• Non-fossil energy capacity to be increased to 500 GW by 2030
• Renewable energy will cater to 50% of India’s energy requirements by 2030
• Total projected carbon emissions to reduce by one billion tonnes between now and 2030
• The economy’s carbon intensity to be pulled 45% by 2030
• Net-zero target to be achieved by 2070

To achieve these very ambitious targets, the government will be putting in place stable and consistent policy frameworks while encouraging steady flow of affordable capital from domestic and international sources. Investors and onlookers are equally excited for the Budget ‘22 to give this sector the much needed uplift. 

So, what are Green Energy companies and why is everyone talking about them suddenly?

Green energy companies are the flag bearers of next-gen’s climate conscious energy demands. Some of India’s biggest players are Tata Power and Adani Green Energy which recently touched the ₹3 lakh crore mark. There you go; now you know!

With ever depleting non-renewable resources getting more and more expensive, it looks like the world is finally turning to cleaner and increasingly less costly renewable energy. Climate crisis is a major threat to humankind, and hence, the urgency to implement cleaner energy sources becomes imperative for governments. The COP26 promises made by our PM makes us further hopeful about the growth in this sector. 

Is Green Energy really the future?

Total worldwide energy usage is expected to grow by nearly 50% by 2050. That would require some staggering amounts of natural resources, which has now become extremely finite. 

Moreover, by 2026, global renewable electricity capacity is forecast to rise more than 60% from 2020 levels to over 4 800 GW – equivalent to the current total global power capacity of fossil fuels and nuclear combined. Renewables are set to account for almost 95% of the increase in global power capacity through 2026, with solar PV alone providing more than half. The amount of renewable capacity added over the period of 2021 to 2026 is expected to be 50% higher than from 2015 to 2020. This is driven by stronger support from government policies and more ambitious clean energy goals announced before and during the COP26 Climate Change Conference.

What’s happening right now? 

26% of the world’s electricity is driven by renewable energies. 

India’s renewable energy capacity stands at 1.49 GW as of October ‘21. That’s ~38.27% of the overall installed power capacity. We are targeting about 450 GW of installed renewable energy capacity by 2030 and about 280 GW (over 60%) is expected from solar. 

Okay, so? How does this affect me?

Well, India is the third-largest emitter of CO2 in the world today and deploying green energy resources for a net-zero India can save lives, catalyse entire new industries, create millions of jobs, drive trillions of dollars of economic value and provide a significant heft to India’s role in the frontline of the global war on climate change. Interestingly,

Kya haal hai market ka?

(source – IBEF)

India ranked 3rd in renewable energy country attractive index in 2021. The government has also set up a target to achieve a capacity of 175 GW worth of renewable energy by the end of 2022, which will expand to 450 GW by 2030. This makes it the world’s most extensive expansion plan in renewable energy. 

In October 2021, India’s renewable energy capacity increased by 1522.35 MW.

The government has allowed up to 100% FDI under the automatic route for renewable energy generation, owing to which the sum FDI inflows in the non-conventional energy sector have amounted to US$ 10.28 billion between April 2000 to June 2021. 

The green job creation in the Indian net-zero economy can be a game-changer, especially for the rural community. The majority of the jobs are available for unskilled and semi-skilled workers. An estimated 50 million jobs will likely be created by 2070, majorly due to the transition to a sustainable energy ecosystem.

And with all these factors in place, India can leverage green growth to add $1 trillion to its GDP by 2030 – and as much as $15 trillion by 2070. 

What’s driving this industry?

(source – Invest India) 

1. New opportunities have sprung up as Wind-Solar Hybrid, Off-shore Wind Energy, Floating PV Projects, Green Hydrogen are being explored as potential green energy sources. 
2. The government has committed to increase the share of non-fossil fuel in total capacity to 40% by 2030. 
3. A Production Linked Incentive (PLI) scheme has been introduced under Aatmanirbhar Bharat 3.0 for Solar PV manufacturing with financial outlays of ₹ 4,500 crores. 

And there’s a smallcase for that…

The Green Energy smallcase by Niveshaay is a portfolio of stocks that will benefit from the development of the renewable energy sector. It includes companies that are making a transition from the sector’s dependence on fossil-based systems of energy production and consumption — including oil, natural gas, and coal to renewable energy sources like wind and solar, as well as other sources like biofuels.

Green Energy smallcase by Niveshaay

Why should I invest?

1. This smallcase drives the future as everyone is eyeing to go green and have started looking for renewable alternatives, so make hay while the sun shines.
2. More and more investors are concerned about the ESG– environment, social, and governance factors while making investment decisions that will benefit renewable energy companies. 
3. Climate change has become a priority for all nations around the globe. The market is being flooded with new entrants, making it a hot avenue for both investors and businesses over the next decade.

In the last few years, the renewable energy sector has snowballed and has become an important part of the energy sector. Production of these green energy sources is also less expensive than fossil fuel development, making it a lucrative opportunity for investors. 

Meet the Manager of this smallcase!

The research team at Niveshaay are the ones to thank!

Arvind Kothari is the brain behind this SEBI-registered Investment Advisory Firm and has been practising Equity Research and Investment Advisory for the last 10 years! His vision has been rock solid– Indians should invest at least 10% of their savings in the capital market, and thus, he and his team aim to provide end to end financial planning solutions to everyone.

The research team at Niveshaay opines that investing can’t ever be confined to the four walls, and one must travel and see the world to know and understand different businesses and trends. 

Value growth lies at the heart of the investment philosophy at Niveshaay and believes in exploiting short-term market opportunities and taking cyclical advantage of any industry trend to reap the full potential.

Further details

To check out more such unique smallcases by Niveshaay, visit https://www.smallcase.com/manager/niveshaay

Here’s your golden opportunity to invest in ‘Green Energy’ as renewable sources have become a  top priority across the world to mitigate carbon emissions and accelerate the energy transition for a sustainable future. As Leonardo Di Caprio’s character in the movie ‘Don’t Look Up’ said, “A man’s always got choices! Sometimes you just gotta choose the good one!”