Investing in Renewable Energy for Long-Term Impact #IndiaFinance

Sustainable finance has increasingly become a fundamental approach to strategic investment in the recent past, linking returns on investment to specific ethical issues and environmental conservation. We understand the importance and future need of investing in renewable energy, including solar power. This is not just about having a growth-oriented business model but also about fulfilling the responsibility towards the planet.

India today is at an exciting crossroads in its energy journey. As one of the world’s fastest-growing economies, our energy requirements are rapidly increasing. However, the use of fossil fuels presents a number of environmental issues including climate change and air pollution. Keeping this in mind, the Indian government has set a target to achieve 500 GW of non-fossil fuel capacity by 2030. In this context, sustainable finance becomes a key driver of change towards the decarbonisation of the energy industry.

Based on financial analysis, solar energy appears to be a very viable and secure avenue of investment. The cost of solar technology has decreased significantly in the past years, getting closer to the levels of conventional energy. It should also be noted that the trend towards greater adoption will continually gain momentum as costs of technology continue to reduce – mainly due to economies of scale. To investors, it offers handsome returns on investment while also minimising risk due to almost negligible operational costs and future certainties of solar energy.

However, the application of solar energy is not only about seizing the financial aspect. The energy from solar is clean and renewable in the sense that the electricity generated from solar is free from greenhouse gases. In a country like India, where air pollution is a major problem, switching to solar energy has the potential to greatly reduce environmental and health risks that are associated with poor air quality. In fact, it is one way of mitigating climate change while at the same time improving standards in the lives of many individuals.

Sustainable finance also supports international goals to reduce carbon footprint under climate agreements. Therefore, consumers and corporations who invest in renewable energy sources help in achieving global carbon reduction targets and exhibit commitment to combating global warming. This aligns the company with internationally acceptable standards while at the same time building a reputation for the company. It appeals to investors who are conscious of the environmental impacts of their investment.

In addition, the solar manufacturing ecosystem offers a number of social and economic benefits. The solar industry creates employment opportunities in the manufacturing of products and services, installation, maintenance and research, among others. For India and many other growing economies, job creation is a very sensitive subject and as such, solar energy presents one of the best opportunities to boost the economy, especially through solar projects. Additionally, solar projects can also supply reliable power to the masses, especially in rural regions, thereby boosting economic activity.

There is much more to be done though in order to realise the full potential of solar power. This can only be done with the participation of governments, businesses as well as investors. Regulation and policy support are crucial for creating an enabling environment to attract large-scale investments in solar energy. Furthermore, new structures of financing that include green bonds and climate–oriented investment funds can help to attract adequate amounts of funds for the development of solar projects and technologies.

Many players in the renewable energy segment are aiming to further develop solar technology, and at the same time, upgrading their manufacturing capacities as well to cater to the increasing market needs. From the application of sustainable finance, one of the objectives is to advance the business while also supporting the sustainable and more resilient energy sector in India.

Therefore, this is strategically significant for the future investment in renewable energy sources, particularly in the solar energy sector. Sustainable finance plays a part in this process and also ensures that financial targets are in line with environmental and or social ones. We are glad that as a solar manufacturing company in India, we are part of such a growing movement and can be leaders in driving innovation for a better tomorrow.

– Vineet Mittal, Director – Finance & Strategy, Navitas Solar