Page 87 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

Energy security
India has always been dependent on imports for its energy needs. But before 2010, India never had to
worry about energy security as it was the topmost concern of the US itself, which ensured geopolitical US has become
stability. self-sufficient
in energy, and
This changed, however, in the wake of the shale gas revolution that helped the US wean off oil imports. geopolitics has
This along with deteriorating geopolitics has made energy security critical. For instance, the recent become less
Russia-Ukraine war caused oil prices to fire up, widening India’s current account deficit. This along stable; this raises
with tightening by the Federal Reserve – strengthening the US dollar – deteriorated India’s balance of the importance of
payments, draining its forex reserves. energy security
But if conventional sources of energy can be substituted by renewable sources (solar, green hydrogen,
etc), both energy dependence and environmental harm shall subside. The government has chalked out
ambitious plans to spur renewable energy generation and its adoption in India.

India’s competitive edge

We believe India is already quite competitive in the New Energy space, not just due to pump-priming
by the government, but also the country’s natural endowments— sun and sand. As improvements in India’s cost of
technology and scale lower production cost, India’s competitiveness shall rise further. producing solar
PVs is 6% lower
India lowest-cost solar PV module producer globally than even China’s

According to IRENA, India is already the lowest-cost producer of solar energy. This is a marked
improvement from its 6th rank in 2010. In fact, the costs have reduced by 90% over the last decade.
The costs are 6% lower than even China’s, thereby making scale viable.
5,500
Exhibit 5:
5,112 India’s PV
installation costs
have reduced
dramatically…
4,400

3,300
(USD/kW) 2,763 2,844

2,200
1,930

1,315
1,132 1,129
1,100
802 626
596 590
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
India's solar PV installation cost
Source: Nuvama Research, IRENA
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