RENEWABLE ENERGY – INDIA 2022 Frequently asked questions
|Date | Version||July17, 2022| 1.0|
|Part:||PART 1 [General]|
|Keywords||‘Renewable energy’, ‘Green Hydrogen’, Paris Agreement’, ‘COP26’.|
Abstract:This three-partseries seeks to provide insight with respect to use, impact and, the regulation renewable energy in India. Each part of the series deals with the following:
Part 1: General: This part provides a general overview of the commercial aspects of renewable energy sector in India and the reasons for its increasing use.
Part 2: Regulatory Framework of renewable energy in India: This part details the legal framework pertaining to renewable energy in India and the initiatives/measures taken by the Government to promote its use.
Part 3: Miscellaneous: This part of the Series covers, among other things, queriesrelated to storage and transmission, pricing and cost recovery, taxation, labour and employment, as well as financing in renewable energy sector.
Part 1: General
1. 1. Outline the key commercial aspects of renewable energy sector in India.
- As of December 2021, India ranked 3rd in renewable energy installations withannual installed capacity of 151.4 gigawatts , constituting:i. Solar energy installations: 49.34 GW
ii. Wind energy installations: 40.08 GW
iii. Small hydro power energy installations: 4.83 GW
iv. Bio-power energy installations: 10.61 GW
v. Large Hydro power energy installations: 46.51 GW.
In April 2022, India’s first pure Green Hydrogen plant with an installed capacity of 10 kg per day at Oil India Limited’s Jorhat Pump Station in Assam was commissioned.
- India’s installed renewable power capacity has increased between financial year 16-20, posting a Compounded Annual Growth Rate of 17.33%, owing to the support of the Government. With the increasing demand for energy, which is expected to reach 15,820 Twh by 2040, renewable energy is set to play an important role. The government plans to establish renewable energy capacity of 523 GW (including 73 GW from Hydro) by 2030.
- Investment in renewable energy in India reached a record $14.5 billion last financial year 2021-22, an increase of 125 per cent compared to 2020-21 and 72 per cent over pre-pandemic 2019-20. The surge in renewables investment comes on the back of the revival of electricity demand from the COVID-19 lull and commitments by corporations and financial institutions to net-zero emissions and to exit fossil fuels.
- Majority of the money flowed through acquisitions, which accounted for 42% of the total investment in FY2021-22, while the remaining was packaged in form of bonds, debt equity investment and mezzanine funding. The largest deal was SB Energy’s exit from the Indian renewables sector with a sale of assets worth $3.5 billion to Adani Green Energy Limited (AGEL). This investment resulted in addition of 15.5 gigawatts (GW) of renewable energy capacity in FY2021-22.
- Investment in renewables is required to more than double to about US$30-40bn per year for India to reach its target of 450GW of renewable energy capacity by 2030, as announced by Prime Minister Shri Narendra Modi at Conference of the Parties, 26thUN Climate Change Conference in Glasgow Summit (COP26).Around 70% of clean energy-related investment is expected to be met by private sources.
2.What is the energy mix in India and the utilization matrix?
- The energy mix in Indiais largely thermal power when compared with renewable energy. Thermal power in India includes coal, lignite, gas and diesel, and renewable energy includes hydro, biomass, urban and industrial waste power, solar and wind energy. Power generated: from thermal resources – about 63.2% at 227,644 MW, comprising:
i. Coal at 195,810 MW (54.3%),
ii. Lignite at 6,260 MW (1.7%),
iii. Gas at 24,937 MW (6.9%) and
iv. Diesel at 638 MW (0.2%).
from hydro resources- about12.6% at 45,399 MW
from nuclear utilities – about 1.9% at 6,780 MW
from other combined – about 22% at 80,633 MW
- • According to the Central Electricity Authority, solar and wind power will account for 51% of installed capacity by 2030, up from 23% in 2021, while the country’s reliance on coal would decline from 53% in 2021 to 33% in 2030.
3.What are key drivers for India’s growth in renewable energy sector and is it anticipated that the use of renewable energy will grow over the next few years?
- The push towards renewable energy is as a result of the commitment made by India at the Paris Agreement, i.e., to achieve a renewable energy capacity of 175 GW by 2022, and the new climate targets set at COP26 Summit. Prime Minister Shri Narendra Modi in his national statement at COP26 Summit in Glasgow, presented five nectar elements for India, Panchamrit, to deal with climate change:
First- India will reach its non-fossil energy capacity to 500 GW by 2030.
Second- India will meet 50 percent of its energy requirements from renewable energy by 2030.
Third- India will reduce the total projected carbon emissions by one billion tonnes from now onwards till 2030.
Fourth- By 2030, India will reduce the carbon intensity of its economy by less than 45 percent.
Fifth- by the year 2070, India will achieve the target of Net Zero.
- India is currently heavily reliant on other countries to meet its energy demand and is set to become the third largest importer in the world by 2050. However, according to World Economic Forum, “even if half the generated renewable power is used to replace imported coal, India can save over $90 billion between 2021 and 2030” . This is another key driver for the Indian Government which is leading to the shift towards renewable energy.
- The war in Ukraine has resulted in disruption of supply of coal and has led to the increase in prices of imported coal. As estimated by ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited), prices of imported coal might rise to about 45-55% in the first quarter of financial year 2023, which will have a huge impact on the domestic users. These geo-political issues have further highlighted the need to shift to renewable sources of energy.
Part 2 and Part 3 to follow.
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