With 300 clear sunny days, over a dozen perennial rivers and a coastline of more than 7,500 KMs, India since the age of Puranas, had realised the importance of the sun and other sources of renewable energy and the power they possess for the benefit of its inhabitants. Post-Independence, India's first Prime Minister, Shri Jawahar Lal Nehru while inaugurating the Bhakra Nangal Dam (having a potential to generate 1500 MW of Power) described it as the 'New Temple of Resurgent India'. However, except hydro power, the other two abundant energy resources - wind and solar remained untapped in the last 70 years mainly due to lack of political will and unviability of relevant technologies.
This fact is not hidden from anyone that India is the world's fourth-largest carbon emitter with its population of 1.3 billion people with power sector contributing majorly to the same. But in the recent years, India has made significant strides in the renewable energy space. The Climate Change concern across the Globe has further propelled the Government and decision makers to develop a detailed blue print for clean and sustainable power for all.
As part of the initial commitments to the Paris Climate Accord, India plans to reduce its carbon emission intensity (emission per unit of GDP) by 33-35% from 2005 levels over 15 years. It is working towards producing 40% of its installed electricity capacity by 2030 from non-fossil fuels. This would lead to a significant shift from coal-based power generation to renewable energy sources. To achieve these challenging statistics, it has to produce 100 GW from solar, 60 GW from wind, 10 GW from biomass and 5 GW from small hydropower by 2022.
And this seems quite an uphill task as the renewable energy development in India is still in its nascent stage. As per the Ministry of Power, Govt. of India, India's energy mix is evolving slowly with fossil fuels meeting 82% of demand; Coal remaining the dominant fuel with a 57.9% share of total production in 2018. However, there is also a silver lining behind the dark cloud, with the share of coal in the energy mix projected to fall to 50% by 2040, while the share of renewables rises significantly. Renewables will overtake gas and then oil by 2020 as the second largest source of energy production.
As per the International Energy Agency's (IEA) Renewables Report, Solar and Wind represent 90% of the country's capacity growth, which is the result of auctions for contracts to develop power-generation capacity that have yielded some of the world's lowest prices for both technologies. The country, which presently has low conventional energy resources in comparison to the energy needs of the huge population and the swiftly growing economy, can foster the enormous potential of solar energy. India is committed towards the development of renewable energy infrastructure. The 175 GW target for 2022 and the formation of ISA led by India and France is another example of the same. Apart from solar, the country is also exploring hydro power potential in the north-eastern states which are an abode to the hydro power opportunities.
Besides the above, change in the energy mix will also ride upon innovative technologies, growing energy demand, strong wind and solar resources, policy support, and growing investments et al and will ensure smart, reliable, clean and affordable energy to over a billion people with an energy consumption growth of 4.2% p.a., faster than all major economies in the world, overtaking China as the largest growth market for renewable energy by the late 2020s.
Another research by University of Technology (LUT) in Finland expounds that India has a huge potential to move into a fully renewable electricity system by 2050, owing to an abundance of renewable resources. If only we can optimally leverage sophisticated technologies to harness proactive collaboration with the industry, academia and energy innovation ecosystem, the region can move straight to affordable renewable systems. Such renewable energy systems can work mainly on clean energy, solar energy, wind energy and other new age storage solutions. Solar photovoltaic is the most economical electricity source and batteries satisfy the night-time electricity demand. In addition to covering India's electricity demand for power, such system simulation can also cover for seawater desalination and synthetic natural gas beyond other measures.
With the right investments in such green technologies, India is well positioned to achieve all this. This is significant given India's burgeoning electricity demand and the persistent supply demand gap along with the summer shortages and outages, the pursuit towards cleaner energy sources will have a crucial role in enabling the country's transition to a fully sustainable energy system. Ensuring those projects secure the necessary financing to enable that development, however, remains a challenge, with a large proportion of Southeast Asian projects considered unbankable. The bankability of renewable energy projects has always been an issue owing to off takers' inability to absorb power and pay for it.
Amongst the various developments that have taken place in the solar and wind power segments this year, the ones that would have a long-term impact on the power sector include bidding in the wind segment, which would mean that utilities would not scout for wind sites and choose wind turbine suppliers through competitive measures. Another vital strand is the government would tender 20,000 MW of solar capacity, which would perhaps be the largest block of capacity to be auctioned in a single tranche for the first time globally. The government's strong resolve to heightened quality standards for imported solar photovoltaic (PV) modules, enforced through inspections will further help procurers get over 25 years of module life. This reflects a national commitment to green energy and shows how the country is fast transitioning towards a renewable-focused economy expediting renewable capacity build-up and removing the difficulties being encountered by developers and manufacturers.
The future looks bright as nearly 293 global and domestic companies have committed to generate 266 GW of solar, wind, mini hydel and biomass-based power in India over the next decade. The initiative would entail an investment of $310 billion-$350 billion. For instance, the International Finance Corporation, the investment arm of the World Bank Group, is planning to invest about $6 billion by 2022 in several sustainable and renewable energy programmes in India.
The Indian power sector has an investment potential of Rs 15 trillion over the next four to five years, which indicates immense opportunities in power generation, distribution, transmission and equipment. While there is plenty of capital chasing the opportunities in the renewable sector, there are several risks that need to be kept in view, including counterparty risks both in terms of developers and procurers.
The good news is renewable energy storage system market in India is expected to witness robust growth, over the next decade, once the cost of storage declines, which is likely to happen because of the sheer volume growth through the electric vehicle route. However, the success will only be possible when the FAME 2 will meet its desired objectives.
To draw a parallel with other countries, in December TESLA's 100MW Hornsdale Power Reserve battery system in South Australia delivered 100 MW into the national electricity grid in 140 milliseconds, instantly powering 1,70,000 homes when the Loy Yang coal power plant suddenly went offline. This testifies, why energy storage has become a complementary solution for renewable energy, which is seasonal and intermittent for ensuring 24×7, robust supply of energy. The thrust on solar and wind projects has increased the challenges in maintaining system stability, which is encouraging developers to support power grid networks with battery storage to help manage the variations in power supply. Renewable energy projects backed with battery technology could transform the energy scenario in India. However, the challenge is to develop a technology that is suitable for large renewable energy projects. As per industry reports, the deployment of energy storage is anticipated to grow over 40 per cent annually in the next 10 years, with around 80 GW of additional storage capacity
The need of the hour is addressing the bankability of renewable energy projects which has always been an issue in India, owing to off-takers' inability to absorb power and pay for it. The power purchase agreement structure needs to be strengthened further to make renewable energy projects more bankable. There are states which, owing to their fiscal challenges, are not encouraging the must-run status of renewables and are forcing such capacities to back down when wind velocities are unfavourable. The government, therefore, should enforce must-run status as an obligation for all consumers to buy a good proportion of clean and green power. On the end of power producer’s side, they need to face these challenges, which include high fuel supply risk, time overruns at plants, and the limited paying capacity of the financially weak distribution utilities due to pre-defined RPOs in their PPAs.
Last but not the least, in order to remain energy positive and to make the most of renewable energy sources, we have to parallelly focus on aggressive promotion of energy efficiency practices as India's Energy demand will witness an exponential spurge owning to the lighting and cooling requirements due to the varied climatic conditions, the developments in the Electric Mobility, growth of the Industries as well as rural electrification. The World Bank in its report titled 'Utility scale DSM opportunities and business models in India' has pegged India's energy efficiency market at Rs 1.6 lakh /- crore by considering the end use energy efficiency opportunities which is four times the Rs 44,000/- crore in 2010, against the backdrop of the success of the Government of India's UJALA scheme to distribute LED bulbs (Bachhat Lamp Yojana). Till now, over 28 Crore LEDs have been sold across the country which has resulted in energy savings to the tune of 36,545 MUs and avoided peak demand of 7317 MW. In monetary terms, savings of around Rs. 14,618/- crores have been achieved. This will also provide a very good market for companies manufacturing energy efficient lighting and appliances as well as companies providing DSM solutions.
In such a scenario, a bright and sustainable future beckons us. Are we ready to unleash our limitless energy in order to make renewable energy more affordable and light up the energy revolution?