India is a leading player, not just a follower, in the global shift towards solar energy generation and consumption. As of April 2024, India ranked fifth in the world for solar power[1] with an astounding 82.63 GW of installed solar energy—a thirty-fold increase[2] in just nine years. This implies enormous possibilities for the production of solar power in the future.
The National Institute of Solar Energy (NISE) estimates India’s solar potential at a remarkable rate of 748 GWp[3]. Since 2014, the installed capacity of renewable energy, particularly the hydro, has expanded by over 128%. Clearly, India’s solar energy business is increasing, as evidenced by remarkable growth statistics and a transparent government mandate for a sustainable future.
For the past few years, India’s solar energy market has expanded dramatically, owing to lower solar panel prices, favorable government legislation, and growing environmental awareness. Furthermore, the government plans to become a significant net exporter of solar energy by 2026.
The nation’s installed solar capacity has dramatically increased during the past five years, going from 21,651 MW to 70,096 MW[4]. in 2023. With the help of programmes like the Production Linked Incentive (PLI)[5] and other aggressive goals, India is on track to produce 500 GW of renewable energy by 2030. The commitment is to achieving a cleaner future for the entire planet, not simply sustainable energy. The sudden increase in demand for renewable energy[6] solutions gives investors an opportunity to capitalize on this spike in capacity. Providing insights into the firms positioned to lead this revolutionary sector, this blog highlights why solar stocks are increasing and also focuses on the different types of solar energy stocks in India.
Why Solar Stocks Are Rising?
India’s solar power facilities have the capacity[7] to produce energy on a dispersed basis, which enables quick capacity increases. These solar power plants in India also generate vast amounts of energy on a distribution basis.
Millions of people in rural Indian communities have profited from the decentralized and dispersed[8] applications of solar energy, which meet their energy demands in an eco-friendly way for lighting, cooking, and other uses.
Furthermore, India’s solar energy industry has grown to be a major contributor to the country’s capacity for generating grid-connected power, which is in line with the government’s goals of promoting sustainable growth and improving energy security.
The Indian government has implemented programmes such as the Production Linked Incentive (PLI) and the Solar Park Scheme[9] to foster the growth of solar electricity and support homegrown manufacturing. These programmes seek to create jobs, increase the affordability of solar energy, and realize economies of scale. The market for solar energy in India was valued at USD 38 billion in 2021 and is projected to expand at a compound annual growth rate (CAGR) of around 40% between 2022 and 2030[10], reaching approximately USD 238 billion.
Solar Energy Stocks in India
As mentioned earlier, let us highlight the various types of solar energy stocks that are best for investors to purchase for this year. They are as follows:
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NTPC Ltd.
NTPC Ltd., also formerly termed the National Thermal Power Corporation, was first launched in 1975. It is also one of India’s largest power-generating firms, which is responsible for generating and selling electricity to state power utility companies on a wholesale basis. With an installed capacity of more than 76 GW, NTPC is currently leading the way as the largest integrated power business in India. The first solar project of NTPC Renewable Energy Ltd. (NTPC-REL) in Chhattisgarh and Rajasthan with 70 MW capacity[11], will begin commercial operations on February 21, 2024. With this, the NTPC Group’s installed capacity stands at 73,958 MW.
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Reliance New Energy Ltd.
Reliance New Energy Ltd., formerly known as Reliance New Energy Solar Ltd., was incorporated in 2021, and its headquarters is located in Mumbai, India. Its main focus was to build a comprehensive ecosystem for new energy in India. Dhirubhai Ambani Green Energy Giga Complex is one of the solar projects being built. It is a 20 GW solar photovoltaic giga factory[12] that will be put into service in four phases of 5 GW each. These 5 GW consists of photovoltaic panels, green hydrogen, power electronics, fuel cell systems and energy storage.
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Tata Power Solar
Tata Power, one of the largest power generation companies, has a subsidiary known as Tata Power Solar[13]. It produces solar products and cells/modules for rooftop and utility-scale solar systems. Over 17 utility-scale solar energy projects totalling 1.5 GW[14] have been installed by Tata Power Solar in 13 Indian states. These plants have outperformed expectations in terms of power generation and easy maintenance, recording higher power output than anticipated. Tata Power is also one of the biggest players in rooftop solar with 500 channel partners and presence in 400 cities. Hence, it will also be a key beneficiary of the rooftop solar scheme – PM Rooftop Solar Scheme.
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Larsen & Toubro
The Mumbai-based multinational organization Larsen & Toubro Limited, or L&T, is focused on heavy industry, industrial technology, engineering, construction, manufacturing, electricity, information technology, the military, and financial services. Having constructed some of the most extensive solar facilities in India, they are a prominent player in the solar photovoltaic installations market. Some of their solar projects include the installation of a 209 MWp solar tracker[15] project in 7 different locations in Karnataka, building a 14.4 MWp Solar PV Plant in Debari, Rajasthan and also Tamil Nadu’s largest 60 MWp[16] solar tracker plant.
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KPI Green Energy Ltd
As a multifaceted player in the solar energy industry, KPI Green Energy Limited is well-known for its contributions. Its interests include power generation as an Independent Power Producer (IPP), providing turnkey solutions to clients of Captive Power Producers (CPP)[17], and selling industrial plots that are leased back to pursue solar power generation. Founded in 2008 and headquartered in Gujarat, the firm has grown to become one of the most significant and reliable participants in the market, owning the most extensive private solar park in the state and specializing in the use of solar energy through a variety of business models.
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JSW Energy Ltd
JSW Energy Ltd was incorporated in 1994, and it is a vital power firm in India that is involved in generating, transmitting, and trading electricity. This firm includes two types of segments, i.e., the thermal power plant and the renewable power plant. On April 20, 2024, JSW Energy Ltd. announced that NTPC Ltd. had awarded a Letter of Award to JSW Neo Energy, its subsidiary, for the establishment of a 700 MW solar project[18]. According to a Bombay Stock Exchange announcement, JSW Energy’s total locked-in generation capacity has climbed to 13.3 GW with the newest project victory, of which 3.1 GW is solar power.
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NHPC Ltd.
Also founded in 1975, the National Hydroelectric Power Corporation (NHPC) Limited is said to be one of the largest hydropower companies in India. Its headquarters are in Faridabad. NHPC Limited is a Mini Ratna category/ public sector utility that continuously focuses on growing its energy portfolio, making it an attractive investment. Additionally, it was given the go-ahead to construct a 200 MW solar facility[19] in Gujarat’s western district of Kachchh.
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Adani Green Energy Ltd.
Adani Green Energy Ltd., or AGEL, is an India-based renewable energy firm whose headquarters is located in Ahmedabad, Gujarat. The Adani Group also owns and operates the largest solar photovoltaic plant in the world, the Kamuthi Solar Power Project. Recently, a group of five top international banks announced that they will provide USD 400 million in finance for its 750 MW of solar projects that are now under construction in Rajasthan and Gujarat. One should be cautious while making fresh investment at this level as the company trades at a p/e of more than 200 and a p/b of more than 30. Apart from this, the company is also highly leveraged as it has more than INR 60,000 crore of liabilities in its balance sheet. The current debt to equity is more than 6 times and the interest coverage ratio stands at 1.3 times.
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Waaree Renewables Technologies Ltd.
Waaree Renewables Technologies Ltd. was incorporated in 1999. This company offers power generation via renewable energy and also provides consulting services. It has delivered a profit growth of around 145% CAGR over the last five years. With a total capacity of 12GW, its plants in Chikhli, Surat, and Umbergaon, Gujarat, have the largest solar panel manufacturing capacity in India. Although both sales and profit have grown by triple digits for Waaree over the last 12 months, one should be cautious while making fresh investment at this level as the company’s p/e and p/b are also in triple digits, which signifies a very high relative valuation.
Finally, don’t forget to do your due diligence. This is just a list of solar energy stocks and companies in India. Make your buying decision only after a thorough research. India’s booming solar energy industry offers exciting investment opportunities. Government initiatives and impressive growth figures are consolidating this trend. When choosing a solar stock, consider factors such as location and company focus (production, power generation). Adani Green, Tata Power, and others offer a range of options for investors looking to take advantage of India’s bright solar future. Also, doing thorough research on these is important before making any type of investment decision.
[1]https://www.investindia.gov.in/sector/renewable-energy
[2] https://www.investindia.gov.in/sector/renewable-energy
[3] https://www.investindia.gov.in/team-india-blogs/indias-solar-power-revolution-leading-way-renewable-energy
[4] https://www.investindia.gov.in/sector/renewable-energy
[5]https://www.investindia.gov.in/team-india-blogs/indias-solar-power-revolution-leading-way-renewable-energy
[6]https://www.investindia.gov.in/team-india-blogs/indias-solar-power-revolution-leading-way-renewable-energy
[7]https://daycoindia.com/blog/market-alphabets/green-energy-stocks-india/https://mnre.gov.in/solar-overview/
[8]https://mnre.gov.in/solar-overview/
[9] Production Linked Incentive (PLI) and the Solar Park Scheme
[10] https://www.custommarketinsights.com/press-releases/india-solar-energy-market-size/
[11]https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2008450#:~:text=The%20project%20is%20designed%20to,5%2C000%20households%20in%20a%20year.&text=The%20first%20solar%20project%20of%20NTPC%20Renewable%20Energy%20Ltd.,-(NTPC%2DREL)
[12] https://renewablesnow.com/news/nhpc-to-develop-200-mw-solar-project-in-india-851912/#:~:text=NHPC%20will%20realise%20the%20project,of%20INR%202.66%20per%20kWh.
[13] https://www.screener.in/company/534618/consolidated/
[14]solar energy projects totalling 1.5 GW
[15]https://www.lntecc.com/renewable-energy-infrastructure/solar-tracker-construction-companies-lnt-construction-209-mwp-solar-tracker-project-karnataka/https://www.lntecc.com/renewable-energy-infrastructure/solar-tracker-construction-companies-lnt-construction-209-mwp-solar-tracker-project-karnataka/
[16] https://www.lntecc.com/renewable-energy-infrastructure/solar-tracker-construction-companies-lnt-construction-60-mwp-solar-tracker-plant-paniyur-tamil-nadu/
[17]https://kpgroup.co/projects/kpi-green/
[18]https://www.ndtvprofit.com/business/jsw-energy-arm-bags-700-mw-solar-project-from-ntpc#:~:text=JSW%20Energy%20Ltd.,power%2C%20a%20BSE%20filing%20said.
[19]https://renewablesnow.com/news/nhpc-to-develop-200-mw-solar-project-in-india-851912/#:~:text=NHPC%20will%20realise%20the%20project,of%20INR%202.66%20per%20kWh.
-Nischay Avichal
