India's power sector will need ₹4.5-6.4 lakh crore of investment until FY35, which is annually 2% of real GDP over the next 10 years, Moody's Ratings said on Wednesday.
The investment is significant and will be funded by the public and private sectors as well as foreign and domestic capital, it said. It will also need ₹6-9 lakh crore annually over fiscal 2026-51, which is 1.5-2.0% of GDP over the tenure of 25 years, as per the ratings agency.
The requirement is more than what China and Australia will be investing over the same period as a proportion of GDP, it said. The private sector will remain very active in India's renewable energy sector, while government-owned companies will also increase their role.
Conventional bank lending and non-bank financial institutions will be the key sources of debt capital for under-construction projects, while debt capital markets will be key to the refinancing of debt for operational projects, it said.
However, access to long-term low-cost capital and foreign capital will be essential to bridge the funding gap, it said. Solar and wind power will dominate new generation capacity additions over the next 20-25 years, with nuclear and hydropower additions being smaller, it added.
Source Name : Economic Times