India renewable energy projections could beat targets
Meena Janardhan
Writer/Editor/Consultant. She has over 25 years of experience in the fields of environmental journalism and publishing.
Photo has been used for illustrative purpose.
The IEEFA and CEF estimate that renewable energy capacity will reach 405 GW in FY2039/30, putting India on track to surpass its target of 50% of its energy from non-fossil fuel sources by 2030.The third largest energy-consuming country in the world is expected to, therefore, surpass the Indian government’s target of producing 50% of its electricity from non-fossil fuel sources by the end of the decade. The key findings of the report also state that thermal power is set to progressively lose market share in India. The recent push to expand use of domestically produced thermal energy is likely to be a short-term hiccup.
The report points out that India has been one of the champions globally in adopting renewable energy as part of its energy transition. Installed renewable energy capacity (including large hydro) rose from a few megawatts (MW) in 2010 to ~163 gigawatts (GW) as of August 2022. India’s ambitious renewable energy targets and the associated policy and reform framework have been an important tailwind for the sector’s development. Additionally, the transition has also resulted in shunning coal power capacity, with additions hitting rock bottom in FY2021/22. There have been several headwinds faced by the renewable energy sector lately, along with rapidly rising power demand from across the country. These factors have led to the government taking a re-look at thermal power as a fix against any power crunch in the foreseeable future.
According to the IEEFA press release, looking beyond utility-scale capacity additions, the report identifies three areas – rooftop solar, solar pumps and renewable energy capacity addition by non-power public sector companies – that will supplement power generation from non-fossil fuel sources. The report finds that India’s green hydrogen target of 5 MTPA by 2030 will require additional renewable energy capacity of ~118GW.
To put the ambitions of Indian corporates into context, the report also undertakes a study of similar clean energy commitments by four global majors – NextEra Energy (U.S.), RWE (Germany), Ørsted (Denmark) and Enel (Italy). The report also finds that all four companies – NextEra Energy, RWE, Ørsted and Enel – have accelerated world-leading investment plans in response to the hyperinflation of fossil fuel commodity prices, reflective of the increasing cost competitiveness of firmed renewable energy. Further, across all the jurisdictions where they operate, a recurrent theme has been accelerating action to progressively reduce fossil fuel-based asset reliance and doubling down efforts in supporting the clean energy sector.
On the decentralized renewable energy side, several segments have the potential to grow multifold as policy-side reforms streamline current bottlenecks and demand-side drivers provide lucrative returns. Even though the country has been a laggard in rooftop solar, state-level reforms, corporate decarburization, and net-zero pledges from commercial and industrial (C&I) customers will accelerate this segment exponentially. Also, with more than 20 million grid-connected agricultural pumps in India, consuming over 17% of the nation’s total electricity, the opportunity for solar pumps is enormous.
Several Indian public sector undertakings (PSUs) have also been committing to install renewable energy capacity in a bid to decarbonize their operations, diversify their business portfolio and also contribute to the government’s renewables plans. Non-power sector PSUs have a combined renewable capacity addition target of 16.5 GW by 2030.
On the demand side, the report says that green hydrogen is a major force that promises to massively drive India’s clean energy ambitions. India’s green hydrogen target of 5 million tonnes per annum (MTPA) by 2030 will require an additional renewable energy capacity of ~118GW.
It also highlights several other upside triggers that are also present, which can contribute to the country’s clean energy target. These include open access capacity installations buoyed by higher demand from C&I customers for procuring clean energy and future wind-solar hybrid projects integrated with storage assets will become more competitive than thermal power. Also merchant capacities traded through power exchanges are also projected to grow exponentially. Policy-side reforms and favourable market dynamics will continue to act as a driver for green merchant capacity additions in the foreseeable future. Offshore wind, a non-starter in the Indian markets, has been given a new lease of life through recent government reforms and targets. Lastly, electric vehicle uptake, projected to be a multi-billion-dollar opportunity in the country, will be a major demand-side driver for clean electricity generation assets.
