Renewable Energy Sector – Challenges & Opportunities

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India’s Sustainable Energy Future

Exploring the Challenges & Opportunities in India’s Market for Alternative and Renewable Power

Ranked as the seventh-largest country in the world by area, India has a rich variety of terrains and weather patterns across its length and breadth. This presents the nation with unique opportunities to harness multiple sources of renewable and alternative energy. Combined with what may well become the world’s largest population within the decade, India stands at a juncture where making the best of all available energy sources may not remain optional for long. 

According to the Central Electricity Authority (CEA), India’s highest energy deficit stood at 0.7% in the financial year 2019-20. While this is a huge step up from the 8.3% deficit experienced in 2011-12, it still leaves the country vulnerable to external factors such as global oil prices which can upend the economy overnight. The criticality of energy independence to national security and stability has been demonstrated time and again. So, if India is to achieve superpower status, achieving energy sufficiency needs to be a primary objective.

India and the Sustainable Development Goals

The Sustainable Development Goals (SDGs) are a set of 17 interlinked goals for international development that were set in 2015 by the United Nations General Assembly. These goals were designed to be a blueprint to achieve a more sustainable future and are expected to be achieved by the year 2030. When they were created in 2015, these goals did not come with this end date in mind. The end date was added in 2017 as a way to make the SDGs more actionable. The SDGs and the ensuing specific targets were ratified by all 193 countries of the UN General Assembly, including India.

Goal #7 in the SDGs is Affordable and Clean Energy.

Due to India being a signatory to the 2030 Agenda, which enumerates the SDGs and the targets to achieve them, it is critical to ensure that these targets are met as prescribed.

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India’s Commitments

The 2017 modifications to the SDGs came up with specific targets to help make the SDGs more concrete in terms of measurability and actionability. However, country-specific targets have not been set, and there are no clear or measurable commitments for any country. Notwithstanding this, India has made promises on a global scale to spearhead the move towards sustainable energy. Being home to one of the world’s largest populations puts a special emphasis on India’s policies and actions in this direction.

The Road So Far

Electricity is listed as a topic under the Concurrent List in India, which means the States as well as the Centre can make laws and policies in this regard. Every state has its own ministry to deal with electricity, but the primary support for alternative sources of energy comes from the Ministry of New and Renewable Energy, established by the Government of India in 1992.

The Centre routinely releases the National Electricity Policy and the National Electricity Plan, the latest of which was released in 2018. This plan reinforced a previously expressed intent of generating 275GW of energy from renewable sources by the year 2027 and 175GW by 2022.

Solar Energy is expected to generate 100GW of the 175GW mark, while Wind Energy is set to provide 60GW.

Thanks to the Central Government’s heavy push towards renewable energy generation after 2015, India’s renewable energy capacity stood at 74.8GW in 2018, as compared to 36.5GW in 2014. In 2018, renewable energy made up 20% of the country’s electricity capacity. The ratio is set to change rapidly in the coming years.

The execution of policies regarding energy is a largely localised matter thanks to India’s sheer geographical variety. Thus, State Governments release their own policies to implement and bolster national plans and policies. So far, the most promising state-level policies have come from the states of Rajasthan, Tamil Nadu, Himachal Pradesh, Gujarat, and Karnataka.

With an aggregate of 300 sunny days in a year, India has massive potential to develop its solar energy systems. In the hilly regions of the North and North-East, there is potential for hydro power. Wind Energy is also being targeted in some of the states’ policies. Himachal Pradesh, which lies in the Himalayan region, has focused on wind and hydro power in its policy, alongside its target for solar energy. While Gujarat has focused heavily on manufacturing solar power equipment, Tamil Nadu, Karnataka, and Rajasthan have taken the lead in setting up massive solar parks. 

Opportunities for Growth

Shoring up the Total Generation Mix

The challenging part of shifting an economy to renewable fuels over fossil fuels is two-fold. One part is about building capacity, and the other is utilizing the existing capacity. While India has successfully set in motion the tools it needs to build its capacity, it’s biggest challenge now lies in ensuring that the capacity translates to a larger share in the country’s total generation mix.

According to the International Energy Authority’s “State of Renewable Energy in India” report in 2019, the capacity utilization factors (CUF) of solar and wind plants have remained very low over the years. In spite of the country’s renewable energy generation capacity being at nearly 20% in 2018, the actual generation contributed to no more than 7.8% in 2018, which is only marginally higher than the 5.6% contribution in 2014.

In sharp contrast, thermal power made up 80% of India’s generation mix in 2018. And this is inclusive of the 57% energy production from coal-burning sources. The reason for this is that plants utilizing such unsustainable, conventional methods run at extremely high capacity utilization. 

Opportunities for growth in the Indian market for renewable and alternative energy are centred around raising the capacity utilization factors of solar and wind energy plants. 

Exploring Alternative Sources

Also worth exploring are other sources of renewable energy such as tidal power, which has a specific appeal for a country with a shoreline of 4,670.6 miles. So far, only the states of Gujarat and West Bengal have ventured into the tidal power business. Both the states’ projects, however, have been shelved since, due to the excessively high capital cost involved in harnessing tidal power.

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Challenges to Consider

Owing to the Central Government’s push towards alternative and renewable energy in the last five years, infrastructural development in the solar and wind energy sectors has grown exponentially. As discussed earlier, however, seeing this growth converted into the total generation mix remains to be a wicked problem for policymakers to tackle.

Handling the DISCOMs

One of the many obstacles standing in the way of converting generation capacity into actual generation is the structure of the nation’s electricity distribution companies, a.k.a. DISCOMs. Privatization of the DISCOMs has helped in terms of allowing for better adaptability, but it has come at the cost of allowing capitalistic interests to overshadow national needs. The recent public protests against private electricity distribution companies like Adani along with the uproar against their exploitative policies goes to show that this may not be a sustainable long-term solution to the public sector DISCOM problem. The IEA’s report entitled “State of Renewable Energy in India” goes into a deeper analysis of this problem.

Developing Other Alternative Sources

While the growth of solar and wind power infrastructure serves the best interests of the country and the world at large, it also gives one cause for concern regarding the development of other renewable sources of energy in India.

At 5,000 trillion kWh per year, India’s potential for solar energy could easily be one of the highest in the world. But the main point of concern should be that in the long term, this may prove insufficient. Other sources must be harnessed well before the need for them becomes urgent. Failing this, the odds are that the cost incurred per GW of energy from other renewable sources will climb ever higher, putting the nation at risk of falling short of capital to make it viable.