Year-Ender 2023: Green energy stocks shine bright as India becomes global leader
“India majorly imports solar panels. During the initial six months of FY24, India saw a surge in solar module imports, reaching a substantial $1,136.28 million. This surpassed the total PV panel imports for the entire FY23, which amounted to $943.53 million, according to Eninrac Consulting,” said, Devansh Jain, Chair of Renewable Energy Committee, PHDCCI.
The government has set a target of 500 GW of non-fossil energy by 2030 and net-zero carbon emissions by 2070. 2023 saw a flurry of policy activity, laying the groundwork for faster growth. Structured annual auctions for 50 GW of renewable capacity, a clear roadmap for achieving Renewable Purchase Obligations (RPOs), and streamlined pricing through a Uniform Renewable Energy Tariff are just some of the initiatives propelling the sector forward, according to InvestIndia.gov report.
As of November 2023, the country’s renewable capacity surpassed 180 GW, with solar leading at 72 GW, wind at 45 GW, and large hydro at 47 GW, constituting over 40 per cent of the total installed capacity, as per the report.
How did India’s renewable energy stocks fare?
Sun shone brightly not just on solar panels but also on Indian stock market charts in 2023. Renewable energy stocks soared, fueled by ambitious government targets, falling costs, and positive investor sentiment.
“Renewable energy stocks had a dream run in 2023 with companies generating returns to the tune of 100-270 per cent. For e.g REC, PFC & Waaree Renewables have delivered returns of more than 250 per cent during the CY23, and at the lower end, Gensol has delivered returns to the tune of 100 per cent in CY23,” said Sunny Agrawal, Head of Fundamental Equity Research, SBI Securities Ltd.
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To invest or not to invest – What’s the potential of renewable energy stocks in 2024?
After a strong 2023, renewable energy companies across wind, solar, hydrogen, hydro, and ethanol are poised for continued growth and healthy returns in 2024. “We expect companies pertaining to renewable energy sectors (Wind, Solar, Hydrogen, Hydro Power, Ethanol, etc) to deliver decent returns in 2024. The entire value chain pertaining to the renewable energy sector, such as Engineering companies, Solar Panel Manufacturers, Pipe Manufacturers, Transformers, Cables and wires, EPC players, Crane operators, Logistic companies, NBFCs, etc, will benefit due to likely robust capacity addition, over the next 2-5 years,” Agrawal opined.
“Investors can look at stock-specific bottoms-up growth stories in the renewable energy sector to create wealth in 2024. Globally, the trend of the shift towards non-fossil-based electricity/energy generation is clearly visible, and the world is rapidly adopting technologies so as to ensure lesser emission of harmful gases. In India, hydrogen fuel is at a nascent stage of adoption, and we may see few of the companies in this sector to deliver healthy returns during the next 12-18 months,” he further added.
“India is likely to witness 25 GW of renewable energy capacity addition entailing an investment of ₹137,500 crore (about USD 16.5 billion) in the2024 calendar year, which would be higher than 13.5 GW with an investment of ₹74,250 crore (nearly USD 9 billion) seen in 2023,” Jain claimed.
Solar will remain the star, but wind power is ready for a comeback. Green hydrogen, backed by the Green Hydrogen Mission, will join the party as a major focus. Policy continuity at the central and state levels adds sunshine to the forecast, promising strong auctions and sustained growth, Jain added.
What drove the movement in 2023?
In 2023, India’s renewable energy sector saw pivotal policy initiatives. These included a structured bidding trajectory for 50 GW annually, a Renewable Purchase Obligation trajectory till 2030, and the introduction of a Uniform Renewable Energy Tariff, according to Jain.
The establishment of Ultra Mega Renewable Energy Parks streamlined development, while infrastructure enhancements involved laying new transmission lines and waiving ISTS charges for solar and wind power. A Production Linked Incentive Scheme aimed at bolstering local manufacturing, and the launch of the National Green Hydrogen Mission sought to position India as a global hub. State-level policies in Gujarat and Rajasthan targeted substantial investments and ambitious renewable energy capacity goals. Together, these measures signaled a holistic approach to drive renewable energy growth and global competitiveness, Jain further added.
Speaking on the scope of improvement to lower the installment cost, Jain said, “Improvement in technology with higher wattage solar panels and higher megawattage wind turbines, leading to a reduction in per unit generation costs and improving efficiency. Increasing ‘Aatma Nirbharta’ or self-reliance across the supply chain.”
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Published: 31 Dec 2023, 01:27 PM IST
