Energy investment has risen most rapidly in India in three years till 2018, up 12% to around $85 billion, the International Energy Agency (IEA) said in its latest report. While global energy investment stabilised at near $1.85 trillion in 2018 after three years of decline, the US and India were the only two countries where investment in energy recorded a growth in 2018 from 2015-levels, the IEA noted.
The country was also the fourth-largest destination for power sector investment in 2018, trailing behind China, the US and the European Union, the agency said. Spending on renewables in India continued to exceed that for fossil fuel-based power for the third year in a row. Solar spending exceeded that for coal power for the first time in 2018.
The report, titled World Energy Investment 2019, attributed the rise in renewable funding to the government-led auctions of solar/wind projects and the current stress in the thermal power generation sector, rendering the latter financially unattractive.
However, even it is adding more renewable plants, India is not totally neglecting coal its more reliable and accessible power source. Global investment in coal supply (on an annual basis) increased for the first time since 2012, thanks to China, India and Australia pumping in more money in this sector though the rest of the world recorded an annual decrease.
Coal supply investment in India grew by 5% in 2018, as the country seeks to cut import costs and tap its own available resources. In 2018, India was the largest market for ‘final investment decisions’ (FIDs) to set up coal-fired power.
Across the globe, FIDs for coal-based stations, or decisions to start such construction for the first time, declined by 30% to 22 GW in 2018, their lowest level this century.
Modernisation of industrial facilities, coupled with strong mandatory government policy, through the perform, achieve, trade (PAT) scheme is an important factor driving greater levels of investment (in India), the IEA said.
The PAT scheme is a market-based mechanism for large energy-intensive industries to improve energy efficiency. Under the scheme, three-year energy consumption targets are set for large industrial sectors. Industry units which consume lesser energy than their respective targets can sell energy saving certificates (ESCerts) to manufacturing plants which failed to do so. One ESCert is equivalent to one metric tonne of oil equivalent (Mtoe). Currently about 620 entities are engaged in ESCert trading.