With what theme did the annual World Economic Forum (WEF) 2022 meeting take place? History at a turning point: Government policies and business strategies, kicked off this Monday against the backdrop of the pandemic, the war in Ukraine and global challenges. There are eight thematic pillars cutting across the broad theme of the meeting. is an important”protect the climate and nature“Which will discuss the energy transition and building a green economy. Clearly, so far, climate change is globally recognized as one of the toughest challenges of the 21st century.
India’s role in this global energy transition is important for two opposite reasons. While the country is the third largest contributor to greenhouse gas (GHG) emissions globally, we also have the fourth largest base of renewable energy capacity in the world (202 GW in 2021) and are the only G20 nation to meet 22 is on its way. C Paris Commitment. India has performed strongly in key areas over the past decade and has set sharp targets for 2030 with a broad target of net-zero by 2030.
Energy Transition in India: Enablers and Opportunities
The energy transition in India has been enabled by various factors. The first is enabling financial and regulatory policy initiatives such as the Production Linked Incentive (PLI) scheme to enhance domestic manufacturing of high-efficiency solar photovoltaic (PV) modules and other policy reforms such as licensing of public charging infrastructure and infrastructure status for grid scale energy. To give. storage system (ESS). Second, with the advent of disruptive technology and innovation on the demand and supply sides, investor interest is increasing. For example, estimates show that investments increased five-fold between 2016 and 2019 when more than 120 start-ups have been funded. In the end, an unprecedented capital raising by both the ruling and the rebels is expected.
While it is estimated that over $60 billion has been invested in the clean energy sector over the past 6 years, it is expected to grow to $80 billion in just three years between 2022-2025. India, as one of the world’s largest and fastest growing economies, has historically engaged in collaborative efforts to combat climate change. Over the years, the country has adopted and ratified several global agreements in this regard. The latest commitments made by Prime Minister Narendra Modi at COP 26 are a reaffirmation of India’s commitment to global emissions reduction targets.
The innovation of this sector also ensures that the future market potential is immense. These opportunities are in solar, wind, small hydropower and biomass production; battery energy storage capacity; Electric vehicle penetration (~2% for 2 and 3 wheelers; <0.5% for commercial vehicles and private cars); Establishment of public electric vehicle charging stations (currently 1700+ public EV charging stations; ~3 million required by 2030); Green hydrogen production which is now negligible; and a drastic reduction in carbon emissions by 2030. The sheer scale that India has in the market will enable a step change in economics across multiple categories.
looking ahead
Clearly, for Indian entrepreneurs, multinationals and capital providers, there is a huge investment opportunity in the next decade in India’s energy transition with new profit pools. However, tapping these new profit pools requires building new business models such as round-the-clock, platform and integrated full-stack net-zero solutions.
Future winners will need to incorporate six elements into their operating model. They need to take a portfolio approach with multiple bets across the value chain in order to maximize value and minimize risk.
A hyper-competitive landscape requires companies to stay ahead of the technology curve through key differentiators. Looking at the upcoming ‘War for Talent’, different models are important to attract and retain the best talent. Partnerships and mergers and acquisitions (M&A) will be a way of life driven by the need to grow, cover risk, invest in innovation and gain access. The emerging trend of setting up and running corporate venture capital funds is one such step in this direction. While the overall regulatory framework is favourable, being an emerging sector, policies are still evolving with the need for strong advocacy. In the end, while there is money available for investment, however, choosing the right partners with shared beliefs and goals is important.
With all of the above, the need to transition to a clean and sustainable future is simply compelling.
Gopal Sharma is a partner at Bain & Company’s New Delhi office. He participated in the 2022 annual meeting of the World Economic Forum.