In Short : The renewable energy sector is poised to break out of its torpor in 2024. Anticipated advancements, increased investments, and supportive policies are expected to propel the sector forward, marking a significant shift towards sustainable energy solutions.
In Detail : The country has set a target of achieving 500 GW of renewable energy capacity by the year 2030 and to fulfill the same would require 50 GW of capacity addition every year.
Multilateral discussions on shifting away from fossil fuels and relying more on renewable energy (RE) capacity seemed to put India in a tough spot in the past year. The government, however, asserted repeatedly through the year – including at the COP28 summit held in Dubai in November –the country’s dependence on coal-based capacity will not only stay, but it would also have to scale up thermal power before the phasing down starts.
This ‘balanced’ approach was considered appropriate by most analysts as the country’s power demand reaches new peaks.
The country has set a target of achieving 500 GW of renewable energy capacity by the year 2030 and to fulfill the same would require 50 GW of capacity addition every year. For the RE sector, the year gone by panned out to be slower in terms of capacity addition and investments made. Experts, however, see tendering and implementation of projects gaining pace, towards the end of the financial year 2023-24.
The RE sector was governed by many challenges especially in the first half of the current fiscal as high solar module prices coupled with the government’s decision of a 40% duty on imports of modules from China made projects unviable.
As a result, the country was only able to add some 6.6 GW of renewable energy capacity by the end of September. But the trend is likely to be reversed in the second half owing to lower prices of solar modules and relaxation of the approved list of models and manufacturers (ALMM) till March 2024 by the government which may enable developers to commission many of the delayed projects by the year end.
“Annual ordering of more than 10 GW thermal and 8-10 GW of wind is envisaged to counter rising base or peak demand in non-solar hours,” Nuvama Wealth and Investment Ltd said in its recent report.
Commercial and industrial and round-the-clock renewables tenders have raised the wind mix to nearly 50% of a project’s composition as against 30% earlier, as per analysts.
Additionally, the module manufacturing under the Production Linked Incentive (PLI) scheme is expected to catalyse the establishment of a significant number of domestic manufacturing units, contributing to a significant addition of RE capacity the next year.
Among RE categories, one segment that has gained traction this year is green hydrogen. The government as well as private companies have accelerated their focus on this arena and has started adding capacities in the same.
The Union Cabinet in January has approved the National Green Hydrogen Mission with an outlay of Rs 19,744 crore from FY24 to FY30 with the objective to reduce its dependence on fossil fuels. It aims at achieving green hydrogen production capacity of 5 million tonne per annum by 2030. “Achievement of Mission targets is expected to reduce a cumulative Rs one trillion worth of fossil fuel imports by 2030 and the reduction of nearly 50 million tonnes of annual greenhouse gas emissions,” the government had said.
Twenty companies including Reliance, Larsen and Toubro, Jindal India, and Adani Group have submitted bids for incentives to manufacture electrolysers under the government’s green hydrogen plan.
The envisioned growth in the RE sector will also require huge investments. As per energy think tank Ember, India requires an investment of $293 billion between 2023 and 2030 to meet its solar and wind capacity addition targets envisioned under the latest National Electricity Plan including investments in storage and transmissions.
As per NEP, the renewable-based installed capacity for 2031-32 is projected at 596,275 megawatts (MW), which includes large hydro (62,178 MW), solar (364,566 MW), wind (121,895 MW), small hydro (5,450 MW), biomass (15,500 MW), pump storage plants (26,686 MW) and battery energy storage systems capacity of 47,244 MW/236,220 MWh.
The government, on the other hand, has estimated an investment of Rs 929,500 Crore in the renewable energy sector during 2022-2025 under the National Infrastructure Pipeline.
Even as India gears itself for long strides in renewable energy, it also realizes that the need for coal-based power is not going anywhere. The government has repeatedly said that it will continue to add coal-based capacity and has announced an addition of 80 GW thermal capacity by 2030 against 51 GW planned earlier as India continues to record peak power demand. The peak power demand in the country hit a record 239.9 GW in September.
To expedite the process, it has also started auctioning new coal blocks for mining and has successfully auctioned 91 mines so far. The government has also asked companies to take suitable measures and operationalise the mines at the earliest.
All of this is being done so as to ensure the energy security of the nation. Even though the country is confident of tripling its RE share by 2030, it faces some key challenges to be able to achieve the same. To begin with, there is the issue of storage for renewable energy and its round-the-clock availability.
Investments required in the sector too, demands for proper addressal, experts say. The International Monetary Fund, in its report, had highlighted that investments made in renewable energy in the emerging and developing economies lags behind those done in the area of fossil fuels.
“Estimates suggest that a target ratio of about 4:1 for renewable over fossil fuel investment is required globally throughout this decade,” the report had said. “As the scale up of RE capacity happens, the financing requirement will go up and that’s when the developed countries will have to step up and contribute, in terms of getting greater access to low cost funding,” Vikram said.
At present, coal-based power accounts for three-fourths of India’s power supplies, and by all indications, it would still have a share of over 60% even a decade from now. This is despite continued focus on renewable energy capacity, and investments being planned to bolster RE storage capacity and connectivity of the benign energy to the grid. A key challenge is to address the intermittency of RE.
