India Attracted $2.4 Bn For Clean Power Projects In 2024: IEA

India recently saw a rise in electricity demand, driven by several factors, including increases in commercial and residential space, a surge in ownership of air conditioners and appliances, and rising demand from industry, according to the International Energy Agency (IEA) "World Investment Report" report. While growth in power generation has come from all sources, there has been a surge in investment in renewables, led by solar PV, which constituted over half of total non-fossil investment during this period, as per the recent findings. For instance, the report found that a significant share of investment went to clean energy. India was also the world’s largest recipient of development finance institutions (DFI) funding in 2024, receiving around USD 2.4 billion in project-type interventions in clean energy generation.

The IEA study showed, "These recent investments have helped bring the share of non-fossil power generation capacity to 44% in 2024, approaching India’s target of 50% by 2030. To meet these targets and to stay on track to meet net zero by 2070, India will cumulatively need to invest USD 1.3 trillion in non-fossil power generation capacity by 2035. This is 16% higher than the amount in the STEPS in this period, signalling a shortfall in total investment under today’s policies. India has announced a range of measures to facilitate and support investment in power generation and its network." 

Impending Financial Risks & Reforms

The data showed that India has been pushing through reforms to improve the attractiveness of renewable power generation investment, including innovative mechanisms to address payment risks. It stated, "Despite India’s cost of capital for grid-scale renewable energy being one of the lowest among its emerging market and developing economy counterparts, the report showed that it's still 80% higher than in advanced economies. This inadvertently leads to higher financing costs affect the financial viability of projects, and higher energy prices. Thus, it explained that any real and perceived risks affect the attractiveness of projects to investors, both domestic and international. The report included risks related to land acquisition, offtaker risk, and risks arising from the inadequacy of transmission infrastructure, which has impeded 60 GW of renewable capacity in India."

The report stated, "Offtaker risk arising from the inability of distribution companies to pay generation companies fully and on time is cited as a key risk by investors. As of March 2025, distribution companies in India owed over USD 9 billion in unpaid dues. The accumulated losses of distribution companies in India stood at USD 75 billion in 2023. To address these risks, India has been incorporating a slew of reforms."

Stating the various measures sought to mitigate risks and unlock greater investment in the sector, the report mentioned reforms such as, "These include Ujjwal DISCOM Assurance Yojana (UDAY), which seeks to improve the financial health of distribution companies by restructuring debt and promoting operational efficiencies; introducing late payment surcharge rules that penalise distribution companies for late payments to generation companies and provide a framework for clearing legacy dues; and establishing the Payment Security Mechanism of the Solar Energy Corporation of India (SECI), which includes escrow accounts, a payment security fund and state government guarantees in case distribution companies fail to pay developers."

[caption id="attachment_104319" align="alignnone" width="582"] Discom's Unpaid Dues To GENCOS[/caption]