India's $35 billion annual renewable financing gap leaves room for InvITs growth
New Delhi, Aug 11
India faces an annual renewable energy financing gap of nearly $35 billion as the country progresses towards its 500 GW non‑fossil fuel capacity target by 2030, a report said on Tuesday.
The report from Knight Frank India mentioned Infrastructure Investment Trusts (InvITs) as an underused financing avenue, as less than 2 per cent of operational renewable capacity has been monetised through InvITs, leaving huge room for growth.
India's non‑fossil fuel capacity has risen fivefold over the past decade to about 300 GW as of July 2026, but nearly 200 GW more needs to be added by 2030, requiring annual investments of $48-54 billion compared to current annual investment of $13-18 billion.
The report said private developers account for more than 90 per cent of operational renewable capacity, making efficient capital recycling critical. Further, the report said financing renewable energy projects in India remains almost 80 per cent more expensive than in mature international markets, making InvITs a critical financing solution, the firm said.
"India's renewable energy journey has now reached an inflection point where financing innovation will be as important as capacity addition," said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.
"InvITs can play a transformative role by unlocking capital embedded in operational renewable assets, reducing the cost of capital over time, and accelerating investments into the next generation of renewable energy, storage and transmission infrastructure," Baijal said.
"As operational renewable portfolios continue to mature, we expect InvITs to emerge as a mainstream financing avenue supporting India's long-term energy transition," Baijal added.
Operational renewable energy assets have demonstrated strong potential as income-generating infrastructure investments. Backed by long-term power purchase agreements and predictable cash flows, renewable InvITs can offer stable distributions to investors while providing developers with an efficient capital recycling mechanism.
The report highlighted that successful renewable InvIT platforms have consistently delivered cash distribution yields of around 10-10.5 per cent.
India's installed solar capacity has grown nearly thirteen-fold since 2016 and now accounts for over half of the country's renewable energy capacity supported by declining technology costs, competitive tariff discovery, improved project execution and favourable policy measures.
— IANS
Reader Comments
Financing costs 80% higher than international markets? That's shocking! No wonder we can't scale up renewables faster. We need to push for cheaper capital, maybe more participation from global funds and pension plans. Our solar push is impressive though - 13x growth since 2016 is no joke.
The $35 billion gap is concerning but not surprising. We're moving fast, maybe too fast without proper financial planning. InvITs make sense for operational assets, but the success depends on regulatory clarity. SEBI needs to streamline the process further. Also, states need to ensure their discoms are financially healthy - otherwise even the best InvIT structures won't save us.
As someone working in the renewable sector, I can confirm - capital recycling is the buzzword everyone's talking about. The 10-10.5% yield on renewable InvITs is genuinely good for retail investors. But let's also talk about storage and transmission - that's where the next big investment push is needed. 500 GW is ambitious but we need to build grid resilience too.
Honestly, the fact that less than 2% of our renewable assets are monetised through InvITs tells you where the problem lies. There's a trust deficit - investors are still wary because of past issues with infrastructure trusts. The government needs to build confidence, maybe with partial guarantees. Otherwise, it's just a fancy idea on paper.
This is where the real India growth story is happening. The 5x increase in non-fossil capacity in a decade is phenomenal. But we can't rest on this. The next 200 GW will be harder. I'd love to see more
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