April 2021

India’s ambitious 450 GW by 2030 renewable energy target and India-US cooperation on addressing the climate crisis were the key discussion points during US Special Presidential Envoy on Climate John Kerry’s four-day visit to India earlier this month. Kerry met Prime Minister Narendra Modi and a host of other dignitaries to deliberate on climate action and a possible collaboration on the 2030 agenda for a clean and green energy transition.

Modi noted that India is among the few countries on track to meet its commitments under the Paris Agreement and there was a broad consensus on the enhancement of bilateral cooperation across multiple areas – mobilising finance to scale up clean energy deployment, cooperating on adaptation and resilience, and collaborating on advancements in emerging technological areas such as energy storage and green hydrogen.

Notably, India has deployed about 94 GW of renewable energy capacity as of March 2021, and 50 GW of projects are at various stages of implementation and another 26 GW is at the bidding stage. Thus, approximately 5 GW still needs to be tendered to even come close to achieving the country’s target of 175 GW of renewable energy by 2022. While the target will be achieved, its timeline may shift by a few months. This will depend on how promptly the government, the renewable energy industry, and the bulk power offtakers (the discoms) address the inherent issues the sector is facing.

Delayed payments from discoms, lack of timely approval of tariffs and power purchase agreements, land and transmission constraints, a weak debt market, and restrictive policies for open access and rooftop solar continue to impact project deliveries. The manufacturing industry too has not been able to pick up pace, in both the solar and wind power segments, despite continued government efforts.

On the positive side, the sector has continued to receive a good response to auctions, despite the Covid-19 pandemic, with solar power tariffs dropping to sub-Rs 2 per unit levels, wind remaining stable at Rs 2.77 per unit and solar-wind hybrid tariffs reaching the sub-Rs 2.50 per unit level for the first time in the country’s history. This shows sustained investor confidence in the sector and suggests that global investments will continue to pour in, provided the industry gears up for change in the new decade and focuses more on hybridisation, energy storage integration, green hydrogen amplification, and greater automation and digitalisation.