Is The Future Bright for India’s Renewable Sector?
Although the spread of Covid-19 slowed the renewable energy transition in India during 2020, there is plenty of evidence to suggest that the future is bright as the country begins to recover.
As 1.3 billion people were placed under one of the most severe lockdowns worldwide, the Indian government introduced a variety of measures to ensure that any setbacks in the transition would only have a short-term effect. These measures showed some clear success, and the government assured the world that the country was well on track to meet its renewable energy targets.
The Show Must Go On
Though the development of new renewable projects did take a hit in 2020, the government was able to provide support to existing renewable manufacturers. The national lockdown proved a considerable setback for the renewable energy transition, as it meant that work on solar installations in the first nine months of the year declined 68% from the same period in 2019.
To avert the same results, commissioning deadlines were extended; all current projects received five-month extensions, rather than being decommissioned
Furthermore, the Indian government was able to provide protection for existing manufacturers by granting wind and solar projects “must-run” status, thereby insulating them from the decline in electricity demand (while coal plants took a major hit).
During the 2019/2020 fiscal year, the average coal-fired power plant ran at just 55.5% operational capacity, according to the Institute for Energy Economics and Financial Analysis (IEEFA). In April 2020, the average Indian coal-fired power plant operated at just 40% capacity utilization, creating inefficiencies and ultimately increasing the cost of production.
On top of these legal measures, the Indian government provided critical financial support to the sector by injecting $13B to power distribution companies (which purchase power from renewable energy projects). This provided liquidity to the renewable sector and ensure that manufacturers continued to be paid on time.
Domestic energy gets a boost
As well as employing initiative to protect the role of renewable energy in meeting current demand, the Indian government demonstrated that it is thinking seriously about using renewable energy to meet the growing demand for affordable and locally manufactured power in the future.
The Power Minister R.K. Singh announced that the government would boost its domestic solar manufacturing base to reduce reliance on imports from China. There were also reports that state-owned companies could be acquired to establish a domestic polysilicon supply chain.
The Prime Minister, Modi, announced that the government would offer new incentives for Indian-made solar modules. This was shortly after solar modules were included in a scheme designed to make domestic players more competitive internationally by incentivising production
Renewable Energy to play key role
Renewable energy characteristically suffers from intermittency (more on intermittency here), which often detracts from its scalability. However, during 2020 the Indian government sought various bids with a view to making renewable energy more acceptable into the grid.
The Solar Energy Corporation of India (SECI) held the country’s first tender for "around-the-clock" clean power last year, which requires developers to bundle solar with wind, hydropower or energy storage to provide an 80 percent plant load factor over the course of the year. At 1.2 gigawatts, the auction represented one of the largest renewables-plus-storage tenders in the world.
Some of the government’s tenders for renewable energy saw record low prices, demonstrating the viability of these sources in meeting demand. During December 2020, the lowest price on record at INR 1.99 ($0.0269) per kilowatt-hour for a 500 megawatt was recorded for a renewable tender, officially making solar energy India’s cheapest source of energy.
India’s Renewable Energy Capacity Set to Increase
Although India’s current renewable energy capacity is the fourth largest in the world, it will have to increase its capacity considerably if renewables are to play a key role in the future of the country’s energy supply. Despite the setbacks caused by the spread of Covid-19 however, the Indian government has re-affirmed that it will be able to do this.
Speaking at the United Nations Climate Ambition Summit in mid-December, Prime Minister Narendra Modi declared that India is ‘on track’ to reach, and ultimately exceed, its ambitious renewable energy targets.
Currently, the country’s total installed renewable capacity, not including hydropower, stands at 90 gigawatts. According to a year-end review by the Ministry of New and Renewable Energy, another 49.59 gigawatts of renewable energy capacity is under installation, and an additional 27.41 gigawatts of capacity has been tendered.
Prime Minister Narendra Modi recently announced that he expects the country’s clean energy capacity to reach 220 gigawatts by 2022 with the inclusion of hydropower — besting the country’s 175-gigawatt target. India has an even more ambitious target of 450 gigawatts of renewable energy capacity by 2030. By that year, the government wants to meet half of the country's power demand with renewable energy resources.
Author: Thomas Parke