Energy needs of most economies across the world have depended on fossil fuels in the past two centuries. Even today, fossil fuels contribute major portion of the energy consumption globally, as also in India.
India is the world’s third largest electricity generator with total installed capacity of 2,28,722 MW. Out of this, 90,062 MW is from state owned utilities, 72,927 MW is from privately owned utilities and 65,733 MW is from central owned utilities. The utility electricity sector in India has one national grid with an installed capacity of 346.05 GW as on 31 October 2018. Renewable power plants constituted 33.60 per cent of the total installed capacity. During the fiscal year 2017-18, the gross electricity generated by utilities in India was 1,303.49 TWh and the total electricity generation (utilities and non-utilities) in the country was 1,486.5 TWh.
India was one of the first countries in the world to have a dedicated ministry for RE. Prime Minister Narendra Modi has given a lot of emphasis on the development of RE. In 2014, even before the Paris Climate Agreement, the government increased the solar energy target almost five times to 100 gigawatt (GW) of solar capacity by 2022 and total RE to 175 GW, with 60 GW to come from wind, 10 GW from bio-power and 5 GW from small hydro power.
The target is to have 40 per cent installed power generation capacity to be based on clean sources by 2030. This capacity would provide for about 17-19 per cent of generation in 2022 and would require a 25 per cent compound annual growth rate (CAGR), far higher than about 5 per cent CAGR needed for the targets set by China, the European Union and California (which wants 50 per cent RE supply but only by 2030). Within India’s solar target, 60 GW is to come from grid-scale large solar farms and 40 GW from rooftop (i.e., consumer edge-based) solar.
In his address on the World Environment Day on 5 June 2018, Modi said: “When much of the world focused on inconvenient truth, we moved on to convenient action. It was this call for action that led India to headquarter the International Solar Alliance. This is the probably the single most important global development in the cause of environment after the Paris Declaration. Our experience says development can be environment friendly.”
The huge demand push from government though its programmes, reverse auctions and lowering costs of turbines and solar panels have contributed to significant reduction in price of electricity generated from renewables. From solar prices of R14 per kilowatt hour (kWh) just a few years ago, newer bids have come in at R2.44/kWh for large grid-scale projects. India also registered the lowest ever wind tariff of R2.43 per unit in a tender of 500 MW project by Gujarat Government in the month of December 2017. India has 5th Global position for overall installed RE capacity, 4th position for wind power and 5th position for solar power, which is quite remarkable. But it comes with its own set of challenges, which are discussed later.
In a bid to exceed Prime Minister Narendra Modi’s climate pledges, India also recently announced that it will tender enough RE projects over the next three years to surpass 200 GW of green capacity build by 2022. With the accomplishment of this ambitious target, India will become one of the largest Green Energy producers in the world, even surpassing several developed countries. The share of RE in overall installed capacity in the country as on 31.10.2018 is given below:
|Sector||Installed Capacity (GW)||Percentage|
A total of around 73.35 GW of RE capacity has been installed in the country as on October 2018 from all RE sources, which includes around 34.98 GW from Wind, 24.33 GW from solar, 4.5 GW from Small Hydro Power and 9.54 GW from bio-power. Further, projects worth 46.75 GW capacity have been bid out/under installation. The Government has declared the trajectory of bidding 60 GW capacity of solar energy and 20 GW capacity of wind energy till 31.03.2020. Projects worth each 30 GW solar power and 10 GW wind power capacity would be bid out each in the year 2018-19 and 2019-20.
This has given assurance to the RE developers and investor community about long-term commitment and planning of the Government in the RE encouraging them to make risk-free investments in the country. Status of projects as on October 2018 is given below:
The government is working pro-actively towards promoting the use of RE. Guidelines for procurement of solar and wind power through tariff based competitive bidding process involving reverse e-auction are already in place as much as an order on waiving the Inter State Transmission Systems charges and losses for inter-state sale of solar and wind power for projects to be commissioned by March 2022.
India currently has RE projects of 46,500 megawatt (MW) capacity in the pipeline for capacity addition. This includes projects, which are currently under construction and those likely to be offered for bidding soon. “We have already installed 73.35 GW and projects worth 21.5 GW are under various stages of implementation and projects amounting to another 25 GW are under various stages of bidding,” said Anand Kumar, Secretary at the Ministry of New and Renewable Energy (MNRE). He further added, “India has made a commitment to the world that by 2030, 40 per cent of its electric power generation capacity would come from non-fossil fuels and it will install 175 GW of RE capacity by 2022.”
A total of 101.83 billion units of power were generated in the country during the year 2017-18 from all RE sources as compared to 61.78 billion units generated in 2014-15 (increase of around 65 per cent during last four years). Share of RE in terms of overall power generation has reached to around 8 per cent from 5.5 per cent in 2014-15.
The Government has revised the target of Grid Connected Solar Power Projects from 20,000 MW by the year 2021-22 to 100,000 MW by the year 2021-22 under the National Solar Mission.
The Ministry plans to bid out remaining solar power capacity in 2018-19 and 2019-20, so that bidding gets completed for entire 100 GW capacity additions by March 2020, leaving two years’ time for execution of projects.
|Sector||Target (GW)||Installed capacity (GW) as on 30.09.2018||Under Implementation (GW)||Tendered (GW)||Total Installed/ Pipeline (GW)|
The tariff for grid-connected solar power projects is determined through competitive bidding process involving reverse e-auction. This has helped in bringing down the tariff significantly. The lowest solar tariff discovered as on date is R2.44/kWh in July 2018 in ISTS based bidding of solar projects in India. The solar tariff has come down from around R18/kWh in 2010 to R2.44/kWh in 2018 due to various factors like economies of scale, assured availability of land and power evacuation systems etc.
Energy Storage is one of the crucial & critical components of India’s energy infrastructure strategy and also for supporting India’s sustained thrust to renewables and electric mobility. With an objective to strive towards leadership in the energy storage sector by creating an enabling policy and regulatory framework, a comprehensive National Energy Storage Mission (NESM) has been developed. The Mission focuses on demand creation, indigenous manufacturing, innovation and necessary policy support for proliferation of Energy Storage in the country.
International Solar Alliance
India took the lead in establishing a global consensus on solar power too by establishing the International Solar Alliance (ISA). ISA became the first international intergovernmental organisation headquartered in India on 6th December 2017. ISA is part of India’s vision to provide clean and affordable energy to all. So far 71 countries have signed the Framework Agreement of the ISA. Out of these, 48 countries have ratified the same.
After inaugurating the first Assembly of the International Solar Alliance in New Delhi, Modi said the International Solar Alliance could replace OPEC as the key global energy supplier in the future.
The vision and mission of the International Solar Alliance is to provide a dedicated platform for cooperation among solar resource rich countries that lie completely or partial between the Tropics of Capricorn & Cancer, the global stakeholders, including bilateral and multilateral organisations, corporates and industry to make a positive contribution to assist and help achieve the common goals of increasing the use of solar energy in meeting energy needs of prospective ISA member countries in a safe, convenient, affordable, equitable and sustainable manner.
Challenges to and from RE
While the growth of RE remains unparalleled, there are a number of practical challenges which threaten the sector’s viability and its inter-connectivity to the grid. These include the variability of RE as the foremost factor. Sun only shines a limited hours a day and there’s no sun at night. In the absence of storage infrastructure, that energy goes to waste and there’s no reliable alternative except conventional energy sources to safeguard at those times. Even in the middle of the day, the output can vary dramatically due to cloudy conditions etc while at the same time, wind is also seasonal and especially in coastal regions.
Meanwhile, falling costs of solar power implies that solar is competing with solar few years hence and utilities may not desire to be locked into a bad deal while the current system works only on long term contracts or power purchase agreements. This issue is not present in coal or traditional power plants as costs have always risen over time.
Additionally, these concerns pave way for other things such as the price and quality variability of solar panels and their life-span especially with Chinese manufacturers as those prices are largely out of the government’s control.
Apart from the challenge of integrating the grid with renewables, thermal power plants are facing a host of challenges with the entry of 175 MW of renewable power which could also become an existential threat. Consistently decreasing PLFs is a major concern area, according to many. PLFs dipped from 64.5 per cent in fiscal 2015 to 59.88 per cent in fiscal 2017 while domestic coal production hasn’t kept pace with thermal capacity addition either. Meanwhile, other factors include lower off-take by Discoms, increased share of renewables in installed capacity and financial stress of Discoms.
According to estimates, there are 13.5 GW of coal plants with but no PPA while there are another 6 GW of projects with no coal source but PPAs further adding to the trouble.
With the RE coming in, the cost pressures on thermal power is rising. With the storage costs slated to go down in the coming years, the pressure on thermal power to perform will be even higher and the only way to cope with these pressures is induction of better technology to cut losses and upgradation of infrastructure to ensure quality, consistent and affordable power 24×7.