CNBC's Inside India newsletter: Is a $270 billion bet on green energy worth the risk?

This report is from the CNBC "Inside India" newsletter, which provides timely and insightful news and market commentary on the emerging powerhouse and the big businesses driving its rapid growth. If you find it interesting, you can subscribe here.

The big story

Despite Elon Musk staying home to handle a high-pressure earnings report, Narendra Modi is still waiting for his meeting with the Tesla CEO.

Even if the two had crossed paths this month, any benefit to Tesla or the Indian economy would have taken years to materialize, if not decades.

There are numerous opportunities for investors in the short term as India moves towards renewable energy sources.

The electrical power transmission sector is projected to experience $270 billion in financial gains, which is expected to drive investments on a par with the $369 billion subsidy program of the U.S. Inflation Reduction Act.

India plans to promote renewable energy without the government spending a single rupee.

Renewable energy consumers can access the inter-state transmission grid without any cost, allowing industrial companies to pay for energy production in another state without the added transmission expense.

The cost of transporting green energy will be transferred to consumers of non-renewable energy, resulting in a cost-neutral delivery for taxpayers.

The economy is expected to feel the impact of such a framework.

Consumers of clean energy are less likely to be affected by a power outage caused by a cloud blocking a local solar plant, as the grid will redirect electricity from a fully operational solar farm elsewhere in the country.

Providing uninterrupted renewable energy without expensive batteries can create new opportunities for previously unprofitable industries.

According to Goldman, the cost of producing green hydrogen is reduced by 30% because electrolyzers can be run continuously.

By 2030, companies like Reliance Industries and Adani Enterprises aim to reduce the cost of hydrogen production to $1 per kilogram, significantly undermining the use of fossil fuels for hydrogen production.

The availability of cheaper hydrogen could make India a hub for the production of green ammonia, a vital fertilizer component, and possibly allow the country to achieve farming self-sufficiency.

Solar power plants and wind farms can be constructed in areas with more prolonged sunshine and stronger winds from an energy producer's standpoint.

The ongoing general election is focusing on creating jobs and opportunities, which will be distributed more evenly across the country instead of concentrating in one state.

India's excess capacity in its transmission grid has made it relatively easy to add renewables to the energy mix in the past.

To avoid increasing costs, the country has added 70 gigawatts of solar power capacity in the past decade by optimizing grid usage. Nevertheless, the growth in renewable energy production may be hindered unless significant investments are made to increase the grid's capacity.

Any advancement that makes grid-scale batteries, which securely and dependably store energy for the grid, more affordable, may alter the trajectory of India's energy transformation. Batteries are typically positioned where they are required, resulting in energy production and consumption being localized and clustered in a limited number of regions.

In India, state governments impose taxes and surcharges on carbon-intensive energy transmission through the grid. As the share of renewable energy in electricity generation increases, the policy of fee-free access to clean energy could lead to a decline in future tax revenues. This has prompted some local governments to challenge the policy.

If clean energy is not affordable, going green could become a distant dream.

The latest on the elections

Our roving reporter in India, News Editor Vinay Dwivedi, has reported on Tamil Nadu, India's sixth-largest state by parliamentary seats, in his first dispatch late last week. However, recent developments suggest that Modi's Bharatiya Janata Party is poised to experience significant growth in the region, according to pundits and politicians.

In New Delhi this week, Vinay focused on the pressing issue of high unemployment among India's youth, with those aged 15 to 29 accounting for 83% of the country's unemployed population. This problem is frequently used to criticize Modi, with the main opposition party labeling it a "ticking bomb."

Need to know

Vodafone Idea experiences a significant increase in shares after its FPO, which helped the company raise funds, enhance competitiveness, and combat subscriber losses.

The Maldives is predicted to move politically away from India.

Cricket, India's most popular sport, is preparing for a huge showcase in the U.S. as the T20 World Cup is being co-hosted by the U.S. and the West Indies. India will face off against Pakistan and the U.S. in mouth-watering matchups.

The JPMorgan boss, Jamie Dimon, has praised India's PM, Narendra Modi, for his "tough" approach to India's bureaucratic system and said that "a little bit more of that" is needed in the U.S.

India's election is underway, and CNBC Pro strategists suggest that large caps offer a good risk-reward for investors to capitalize on.

What happened in the markets?

The Indian stock market indexes, and , are experiencing a positive week so far, with gains of 2.23% and 3.86% respectively, after losing about 1.5% last week.

The Indian government bond yield has decreased to 7.18% after a brief increase of 5 basis points on Friday. Meanwhile, the Indian rupee has strengthened against the dollar as global oil prices dropped from their $90 high last week.

This week, the equity investors' index has increased by 1.3%, lagging behind the index, which has risen by 2.1%. Meanwhile, the India ETF has experienced a growth of 6.5% in the current year.

This week on Biz Focus Hub, Anand Rathi Institutional Equities' research analyst Mumuksh Mandlesha discussed government policy and the future of India's automotive industry.

Rajeev Chaba, CEO Emeritus of MG Motor India, stated that competition in the car industry is currently limited, and he hopes for more players to enter the market with more choices.

Meanwhile, Rob Brewis, a portfolio manager at Aubrey Capital Management, argued that a better short-term investment opportunity was actually India's electric two wheelers.

What's happening next week?

JNK India, one of the leading heating equipment companies in India, will complete its IPO over the new week. The listing date is next Tuesday.