How we can make the Indian renewable energy sector more attractive for private investment? When this question was asked to the experts, they pointed out that India needs some policy reforms like a reduction in duties and taxes. Apart from that India needs to upgrade its existing grid infrastructure and restructure the DISCOMS. If these are done then only India will be able to achieve its goal of having clean energy as the source of 50% of its installed electricity capacity by 2030. Here in this article, we have explained 5 points that can help India achieve its energy goals.
It has been a year since India announced its new climate pledges at the 26th Conference of the Parties (COP26) climate meet in Glasgow.
- As on November 11, 2022, India’s non-fossil fuel electricity capacity stands at 171 GW (42%) of a total installed capacity of 407 GW.
- To achieve its pledge, India would have to increase its current non-fossil capacity by 138.5% and reach 408 GW or 50% of the estimated electricity demand (817 GW) by 2030.
- India would need to raise its non-fossil capacity by 138.5% and reach 408 GW or 50% of the projected power consumption (817 GW) by 2030 to meet its commitment.
Here are 5 ways How India can achieve its Renewable Energy Goals.
Growth in renewable energy capacity
There is global agreement on the need to phase down the use of fossil fuels, particularly coal, and move to clean energy sources urgently to limit global warming.
Over the past five years, India’s capacity for non-fossil fuels has increased significantly. India had to revert to coal due to rising energy demand brought on by the post-pandemic recovery of the economy, although its installed capacity of non-fossil fuels has been expanding faster than that of fossil fuels for at least five years.
However, RE capacity remains below the government’s own goals. For instance, India aimed to reach 175 GW of renewable energy capacity by 2022, but the country only has 118 GW at the moment.
India will need to add roughly 30 GW per year until 2030 to reach its green energy goal of 408 GW (including large hydropower), which is nearly equal to the country’s present total installed capacity (fossil and non-fossil combined). Since 2018, it has increased its installed capacity from non-fossil sources by an average of 11.25 GW.
The climate commitment made by India is based on installed capacity rather than actual generation.
India currently has an installed capacity of 57.9% for fossil fuels and a capacity of 42.1% for non-fossil fuels. India still produces the majority of its electricity using coal, with renewable energy making up only 26% of total production.
Reducing custom duties to hasten solar sector growth
India has reached 60%, or 60 GW, of its goal of 100 GW of solar energy by 2022. (renewable energy goals.)
The Standing Committee on Energy expressed its displeasure with the pace of the development of RE projects in India in July of this year. By establishing more than 50 solar parks and ultra-mega solar power projects, India hopes to install 40 GW of solar energy by 2022. 39 solar parks with a combined capacity of 22 GW have been approved for construction in 17 states to meet this goal. Eight of these approved ones have practically complete infrastructure development, and four more solar parks have partial infrastructure development.
The committee noted that the remaining 11 solar parks, which have a combined capacity of 17 GW, had not even received ministry permission.
The main obstacle is land acquisition, which depends on the support of the state governments and other parties. But it is puzzling why, even after more than three years, 11 solar parks have still to receive clearance. Target-setting becomes meaningless as a result.
Additionally, despite a 2022 objective, only roughly 21% of the ambitious PM-KUSUM scheme’s ambitious 359,000 standalone solar pumps were built in India by December 2021, which was only 27% of its intended capacity addition for rooftop solar in the residential sector.
Experts advise reducing imports and taxes as one of the incentives for solar.
India increased the basic customs duty (BCD) on solar equipment to 40% on April 1, 2022, and increased the GST rate on renewable energy equipment and parts from 5% to 12% starting in October 2021.
While the government intended to reduce reliance on imports and encourage domestic production by imposing a BCD of 40% on solar equipment, analysts have noted that India’s domestic manufacturing capacity is still insufficient to meet it’s expanding demand for this equipment.
Changing the bidding system for wind energy could tap India’s wind potential
India has a minimum 302 GW gross wind power potential, however, as of now, only 39 GW of its 60 GW plan for 2022 have been installed. This includes its enormous unrealized offshore wind potential.
Reverse e-auctions for wind energy that were supposed to improve India’s ability to generate wind energy instead had the opposite effect and are now being considered for discontinuation by the country.
Because the economics did not favor the developer, there was a significant gap in reverse e-auction volumes and execution for wind energy. The ‘discovered’ prices (per MW of power) were not viable.
Better grid infrastructure is key to handling growing renewable energy capacity
Our aspirations for RE are hampered by the country’s unreliable transmission system, particularly when projects are located far from major population centers and consumption centers. For instance, ambitious plans to construct a sizable solar facility in Leh with a capacity of 7.5 GW were abandoned in 2021 due to inadequate transmission infrastructure. Within the next five years, the government wants to construct that transmission infrastructure in the area. The government is collaborating with the Ladakh administration to implement the plan, which has been modified to 10 GW.
Grid infrastructure to support the distribution of renewable energy was also identified as a focus area in a report by BloombergNEF (BNEF) that was published in June 2022.
Increasing generation capacity, replacing aging infrastructure, and making grids smarter and more dependable by installing sensors and software at nodes and endpoints are the main factors influencing grid investments. India’s transmission and distribution grid will require $175 billion between 2020 and 2029 to support new capacity additions and network reinforcements.
Subsidies for battery storage tech, grid infra
Subsidies are one way the government can support any industry. According to a May 2022 evaluation by the International Institute for Sustainable Development (IISD) and the Council on Energy, Environment, and Water (CEEW), New Delhi, RE subsidies peaked in 2017 and have been declining ever since.
According to the estimate, fossil fuel subsidies were nine times bigger than those for renewable energy by 2021 because RE subsidies had decreased by 59% since 2017 while fossil fuel subsidies had remained essentially the same.
“The grid-scale solar photovoltaic and wind have achieved cost parity with coal-based generation. However, to manage the variable nature of REpower, more subsidy support will be needed to scale up battery storage technology and to strengthen infrastructure for transmission and distribution” said Prateek Aggarwal, Programme Lead at CEEW
DISCOMs need to change
India has recently increased its goals for distribution businesses (discoms) to buy renewable energy, which is a positive development. The amount of power that must come from renewable sources must meet a minimal standard, with the availability of these resources and their effects on retail tariffs taken into account. The objective for states’ total renewable purchase obligation (RPO) for the fiscal year 2022–2023 has raised from 21% to 24.6%.
By 2030, states will be required to meet these responsibilities by purchasing 43.33 percent renewable energy as part of this aim. The Electricity Amendment Bill, 2002, which was presented to the Lok Sabha on August 8, 2022, seeks to alter the Electricity Act 2003 by adding sanctions on discoms that fail to meet their RPOs. The standing committee has been tasked with looking into the Bill.
However, only a few states with abundant renewable energy resources have been able to reach the old requirements each year due to a lack of capacity, leaving the remainder behind. This raises the question of how those states will catch up.