In the recent past, India has witnessed one of the fastest growth rates in renewable energy capacity addition among all large economies, with renewable energy capacity growing by 2.5 times and the most growing sector is solar energy which is expanding by over 13 times. The renewable energy sector contributes more than 24 percent of the country’s installed power capacity and around 11.62 percent of the electrical energy generation.
The share of renewable energy in electric installed capacity consists of over 36 percent and over 26 percent of the electric energy generation. Around 49.59 GW renewable energy capacity is under installation, and an additional 27.41 GW capacity has been tendered. This will contribute to the commission of the total capacity of the renewable energy sector about 166.63 GW. The target is to install non-fossil fuel electricity of 500 GW capacity by 2030, for which India’s Central Electricity Authority (CEA) has done an energy mix projection for 2030, another main goal is to source 50 percent energy requirement from renewables by the same time. To reduce 1 billion tonnes (1 Gt) of projected emissions from the current CO2 levels (2.9 Gt) even as one projection indicates, in a business-as-usual-scenario, it will be 4.5 Gt in 2030.
The fourth aim is to achieve a 45% carbon intensity reduction over 2005 levels by 2030. India has already reduced its GDP emission intensity by 25% between 2005 and 2016, and is on track to reduce it by more than 40% by 2030. To meet these goals, a major deployment of clean energy technology such as renewables, electric vehicles, and energy-efficient building retrofits is required.
A strong network of storage batteries is required to ensure the full utilisation of captured solar energy. The trend of the last five years indicates that the cost will come down in the next three to five years. The main challenge in India is to acquire large parcels of land and will be more so in the next 10-20 years as the population grows, urbanisation expands and more and more land becomes arable. To address this, the efficiency of solar panels needs to be improved from the current 19-21% and similarly further R&D on the technology front would be necessary.
Rapid and modern technological innovation in these areas will boost new and cost-effective technology development. More engaging collaboration between private R&D, engineering institutes and the solar panel manufacturing industry should be encouraged and incentivised. The main enabler for this sector is the upgradation and expansion of grid capacity for the 500 GW target. The cost of electrolysers needs to be reduced to achieve the goal of green hydrogen cost parity with natural gas.
The main challenge in this field is the overall financing of solar generation plants, storage battery network, hydrogen electrolysers, EV charging infrastructure, grid upgradation. Working in consonance, there should be serious moves to attract sizable long-term funding at low interest. Already significant interest has been developed around ‘green bonds’ and promotion & adoption of green finance is the way forward. These technologies need to continue to develop and get more efficient, there is a need for viability gap funding – to bridge the gap between what a user can pay as a fair price and what is viable from the point of justifying the investment or at least cover the cost of capital.
To achieve green missions, the basic and growing energy needs of the common man should be met through clean but affordable sources. India needs to transition to a low-carbon economy, workforce transition will need to be managed in fossil fuel-based industries with social safety nets, as also to ensure that the green opportunity provides avenues for economic prosperity. But while the renewable energy industry endured a turbulent 2021, coal remains the dominant player in India’s electricity mix. By 2040, the power demand is expected to triple as India’s population helps to achieve upward mobility, fossil fuels are poised to see continued growth even as the clean energy market thrives.
The Government has launched many initiatives to promote renewable energy in India. It has given power distribution companies (discoms) a roughly $13 billion liquidity injection as part of a stimulus package to shore up the Indian economy. Discoms fell deeper into debt due to weak power demand caused by the Covid-19 pandemic. To keep India’s clean energy transition moving forward, the financial health of the utility sector is critical.
In the coming years, India will eventually become the largest market for utility-scale battery storage. The government is grappling with what the ecosystem for energy storage in India should look like, including the mix of standalone battery projects versus renewable energy hybrid systems and requirements for ancillary services. Over the last decade, the Indian government has focused on adding solar and wind energy capacity and has pushed forward for installing solar-wind hybrid systems to address the peak-valley energy demand situation. It requires deep structural reforms to create a cleaner, more flexible and more efficient power system. With the deployment of renewable energy and the willingness of the government to constantly experiment with new policy approaches, there is a reason for optimism about India’s energy future.
The Author is a founding team member & Assistant Vice President (AVP) of Oorjan Cleantech (https://www.oorjan.com). Oorjan is co-founded by IITians and ex-bankers and is one of the fastest-growing solar companies in India.
