Mission 500 GW

Energy experts discuss the COP26 target

A key point of discussion, currently, in India’s renewable energy sector is the new targets announced at COP26 for installing 500 GW of non-fossil fuel energy capacity and sourcing 50 per cent of energy requirement from renewables by 2030. Energy sector experts discussed whether the target is achievable, the key obstacles and the policy reforms required. We requested some experts to focus on their topics of specialisation for the sake of variety. Edited excerpts…

Are the targets of installing 500 GW of non-fossil fuel energy capacity and meeting 50 per cent of energy requirements from renewables by 2030 achievable, given the challen­ges in realising the 2022 target?

Vaibhav Chaturvedi, Fellow, Council on Energy, Environment and Water

Vaibhav Chaturvedi

The 50 per cent share target is achievable, assuming it is the share of renewable energy in electricity generation capa­city. The 500 GW target is ambitious, but achievable. The only big challenge is economic growth. As this target is in absolute numbers, as against a percentage share, the absolute demand for electricity matters, which is critically dependent on economic growth. Thus, if economic gro­wth goes down for any reason in the next 10 years, electricity demand will go down along with the possibility of ins­tall­ing 500 GW of non-fossil capacity.

 

 

 

If economic gro­wth goes down for any reason in the next 10 years, electricity demand will go down along with the possibility of ins­tall­ing 500 GW of non-fossil capacity – Vaibhav Chaturvedi

 

Somit Dasgupta, Senior Visiting Fellow, Indian Council for Research on International Economic Relations

Somit Dasgupta

The 500 GW capacity is not just renewable, but is termed as non-fossil fuel, wh­ich includes large hydro and nuclear as well. Be that as it may, a target of 500 GW by 2030 does seem steep as it translates into about 50 GW of additional capacity ea­ch year for the next eight years. Consi­dering the fact that during the last five ye­ars the annual capacity growth has been about 9 GW for solar and wind combined, reaching the magical figure of 500 GW would require Herculean efforts. It wo­uld be pertinent to add that our track record in nuclear and hydro is not too good either. We have added a little less than 8 GW of hydro in the last 10 years due to rehabilitation and resettlement iss­ues, delays in clearances, litigation, civil society protests against construction of large dams, etc. Similarly, our nuclear ca­pa­city is under 7 GW, even after being in business for so many years.

In generation terms, although it was an­nounced that India will meet 50 per cent of its generation needs from renewables, a lot would depend on the relative cost of generation from conventional vis-à-vis re­newable sources and other associated factors such as the cost of storage. For the record, the share of renewable generation (inclusive of large hydro) in yearly total ge­neration is only about 20 per cent at present and reaching 50 per cent in a matter of eight years will be a quantum jump. Equally important is the question of whether the grid would be able to absorb such a high percentage of renewable ge­ne­ration. Today, we are managing by ba­cking do­wn our coal generation, but this is a highly inefficient method.

Equally important is the question of whether the grid would be able to absorb such a high percentage of renewable ge­ne­ration. Today, we are managing by ba­cking do­wn our coal generation, but this is a highly inefficient method – Somit Dasgupta

Ammu Susanna Jacob, Research Scientist, Center for Study of Science, Technology and Policy
Kaveri Ashok, Senior Research Analyst, Center for Study of Science, Technology and Policy

Ammu Susanna Jacob and Kaveri Ashok

India’s total non-fossil installed capacity (including nuclear) currently stands at 157.32 GW. To reach the 2030 target, the co­untry will have to install 343 GW of non-fossil energy in the next eight years. This is po­ssible if we install 43 GW of non-fossil energy per year. The MNRE press rele­a­se in December 2021 states that in the past 7.5 years, rene­wable en­ergy capacity addition (including large hy­dro) has grown by 1.97 times. If the gr­owth continues at this rate, we are likely to reach our 2030 target of 500 GW. In addition, with the achievement of eco­nomies of scale and the current cost trajectories, 500 GW of non-fossil capacity and 50 per cent generation from renewables appear to be achievable targets from an optimistic point of view. A key determinant will be the deployment of battery storage technology and its associated costs. With a dramatic reduction of ba­ttery sto­rage cost (battery prices dropped by 90 per cent in the last de­cade), India seems to be in a good position to achieve these targets.

 

Debajit Palit, Director, Rural energy and livelihoods, The Energy and Resources Institute

Debajit Palit

Given the experiences in the implementation of solar projects in the last few years, I think the target is achievable, although challenging. While India could achieve the 500 GW of non-fossil fuel capacity addition by 2030, the real challenge would be sourcing 50 per cent of energy requirements from renewables. This will largely depend on how fast renewable energy-based storage technologies are developing as well as reduction in prices, the pa­ce of setting up of electric vehicle (EV) infrastructure, transition to EVs and electric cooking in rural areas, and developments on the green hydrogen front. Co­al demand will probably rise till the late 2020s; however, there may not be a requ­irement for additional thermal capacity.

 

 

 

Sanjib Pohit, Professor, National Council of Applied Economic Research

Sanjib Pohit

It is no doubt an ambitious target. Further, with the economy in shambles, especially after the Covid-19 pandemic, it remains to be seen whether achieving these targets will be a priority of the government. Also, the 2030 targets are not binding, in the se­nse that the government could always de­viate from them. I believe India will be able to achieve 70-80 per cent of these targets. Me­anwhile, the 2070 target of achieving net-zero emissions is more or less binding.

 

 

 

 

With the economy in shambles, especially after the Covid-19 pandemic, it remains to be seen whether achieving these targets will be a priority of the government – Sanjib Pohit

 

Rahul Walawalkar, Founder and President, India Energy Storage Alliance

Rahul Walawalkar

Yes, the targets set by the Indian prime minister are achievable with the rapid progress being made by renewable energy technologies like wind and solar as well as the emergence of enabling technologies like advanced energy storage. With the ongoing improvement in the performance of these technologies and scaling up of the deployment, the costs are coming down, which makes renewable energy more affordable, thus enabling the targets. The Indian economy is growing and with the recent focus on manufacturing, e-mobility, and green hydrogen, there will need for the ambitious targets to be achieved. Skeptics feel that the 500 GW non-fossil fuel energy target is too big given current grid requirements. But in the coming decade, renewable energy can also have a larger share of serving the needs of the transportation sector through the emergence of electric vehicles as well as the agricultural and industrial sector through green hydrogen.

 

 

Skeptics feel that the 500 GW non-fossil fuel energy target is too big given current grid requirements. But in the coming decade, renewable energy can also have a larger share of serving the needs of the transportation sector through the emergence of electric vehicles as well as the agricultural and industrial sector through green hydrogen – Rahul Walawalkar

What will be the key obstacles to achieving the 2030 targets?

Vaibhav Chaturvedi

Low-cost finance is going to be very important. The threat of greenflation is emerging. If the basic cost of solar panels increases due to increase in the cost of un­derlying raw material, solar-based electricity will become more expensive. The only way to counter this would be if developers have access to low-cost finance.

Somit Dasgupta

Apart from the regular problems of land acquisition, cost of finance, etc., the big­gest obstacle in meeting our targets as far as solar- and wind-based projects are concerned is the tendency to reopen power purchase agreements (PPAs). It is the central government that fixes the targets. Unfortunately, the states are not on the same page and are repeatedly questioning done and dusted PPAs. This affects investor sentiment. Another major obs­tacle is the practice of not paying renewable generators in time and also asking them to back down. This creates severe cash flow problems and in some cases has resulted in the generator going out of business. One issue that merits me­ntion is the problems faced in the rooftop solar segment. While we have a target of installing 40 GW of rooftop solar by 2030, we have achieved a meagre 6 GW so far. There are some specific issues afflicting this sector, which include lack of awarene­ss, lack of easy finance, long payback pe­riods, delays in release of subsidy and poor after-sales service. We need to add­ress this immediately in order to make headway in the rooftop solar segment.

Ammu Susanna Jacob and Kaveri Ashok

The lack of domestic production of renewable energy equipment/technologies pos­es a huge challenge for India in achieving the 2030 targets. As an example, even th­ough solar power installations are growing at a rapid pace in the country, India continues to import solar cells, wafers, inverters and other accessories. In addition, a paucity of energy storage technologies in the grid to cater to variable renewable energy, and the varying regulatory framework and procedures across different states for renewables could hinder our progress.

In general, India faces the twin challenges of achieving the climate goals while not compromising on its development objectives. For a just transition to clean energy, India will require climate finance, and has already clearly indicated that the targets announced at COP26 are contingent on the availability of climate finance. The un­availability of international funds and technology transfer will definitely prove to be significant obstacles in achieving the 2070 net zero target, if not the 2030 targets.

For a just transition to clean energy, India will require climate finance, and has already clearly indicated that the targets announced at COP26 are contingent on the availability of climate finance – Ammu Susanna Jacob and Kaveri Ashok

Debajit Palit

There are four key obstacles. One, the availability of long-term finance for the pro­jects; two, the discoms’ ability to pay to project developers against electricity procured, unless sectoral reforms are un­dertaken to depoliticise and professionally corporatise the discoms with proper disclosure norms in place; three, meeting the large-scale land requirement for rene­wable energy projects without antagonising the farming community and local stakeholders/community; four, enhancing grid integration of renewables, which will require an aggressive portfolio of power system flexibility options supported by major regulatory and market reforms.

Sanjib Pohit

The key problem is that the right choice regarding different energy sources has not been made. With a greater focus on the solar sector, domestic manufacturing is needed. Further, owing to the dependence on imports, there is a problem of price volatility. In this space, important de­cisions need to be made regarding the solar technology to be used. In general, ov­er­de­pen­dence on the solar sector – as is the case lately – is not a good strategy as problems of grid balancing emerge. India needs to focus more on offshore wind as generation is higher vis-à-vis on­shore wind and useful land area is not wasted, making it a more efficient energy source. Unfortunately, this sector is not be­­ing promoted.

Rahul Walawalkar

While it is possible to achieve the renewable targets, it cannot be done the same way it has been done in the past decade with a focus just on cheaper energy. We need to start valuing the quality and flexibility of the energy, which means, we need to start accelerating the deployment of energy storage technologies that will enable us to get to 50 per cent renewable energy utilisation. We also need to focus on manufacturing as 4-times the current deployed renewables are yet to be built. The key obstacle for us is to develop the necessary skills and manpower to enable this upcoming transition.

What kind of policy changes are needed to achieve the targets?

Vaibhav Chaturvedi

Over the last seven years, the government has implemented many policies such as the reverse auction for better price discovery, ultra mega solar parks for addressing land acquisition-related challenges, and dedicated transmission infrastructure, wh­ich have had the desired impact on In­dia’s solar and wind penetration. The so­lar sector has benefited much more from these initiatives. The next big step has to be a robust legal regime so that investors and developers are not left at the mercy of abrupt political decisions such as cancellation of earlier tenders. The central government, in partnership with the state governments, has to ensure that there are no actions that spook investors and damage the credibility of India’s investment eco­system in the energy sector.

Along with measures to promote renewable energy penetration, I think what is eq­ually important is the promotion of do­mes­tic manufacturing of solar cells, modules, panels and batteries. We might end up in a scenario with high penetration of solar, but 90 per cent of this being imported, which is not a good scenario. This is much trickier than pushing solar into the grid, as domestic manufacturing can go up significantly only if domestic manufacturing units are competitive compared to imports. Competitiveness depends on va­rious factors such as low-cost electricity provision and economies of scale, and must be achieved sooner rather than later.

Along with measures to promote renewable energy penetration, I think what is eq­ually important is the promotion of do­mes­tic manufacturing of solar cells, modules, panels and batteries – Vaibhav Chaturvedi

Somit Dasgupta

Speaking of policy changes that are re­quired, it is not only a question of what we should do, but also what we should not do. We should not levy safeguard duties for short periods as we did in 2015 for a period of two years. The protection should be made available for a minimum of six to seven years. The two-year protection had the opposite effect as developers simply postponed their investment decisions leading to a decrease in the pace of capa­city growth. Of course, the government has now decided to levy a basic customs duty of 40 per cent on solar modules, which wo­uld be applicable from April 2022. Since no sunset date has been mentioned, it is presumed it would be valid at least for the medium term. This would provide comfort to domestic manufacturers but will lead to an increase in solar tariffs.

As far as other policy changes are concerned, one has to look forward and start th­inking of green hydrogen, since India has a generous renewable potential. India co­uld not capitalise on the solar industry wh­en the time was ripe and we lost the race to China. This time around, the government needs to ensure that India emerges as one of the leading hubs for the production of electrolysers. This will require not only investments in R&D but also huge subsidi­es. We need to achieve economies of sc­ale to lower the cost of electrolysers.

India co­uld not capitalise on the solar industry wh­en the time was ripe and we lost the race to China. This time around, the government needs to ensure that India emerges as one of the leading hubs for the production of electrolysers. – Somit Dasgupta

Ammu Susanna Jacob and Kaveri Ashok

Since 50 per cent of energy generation will be from renewable energy sources, storage technologies such as battery and pu­mped hydro will have to be integrated into the Indian grid. The use of storage in the grid reduces the curtailment of renewable energy and ensures ancillary services and round-the-clock support. A policy framework is under development by the Ministry of Power. The policy will need to focus on individual storage technologies and the collective services that storage can provide to the grid, along with revenue streams. The domestic production of renewable en­ergy and storage technologies should be encouraged and incentivised.

We lack clarity on the move away from coal, or the role of natural gas as a transition fuel and its role in the hydrogen economy. A comprehensive roadmap, clearly de­li­n­e­ating the role of each technology, will be re­­quired in order to ac­hieve the targets with­­­­out stranded assets and financial liabilities.

Debajit Palit

Some of the policy-related measures that need to be taken to achieve the target and at the same time ensure that the renewable energy sector creates value in an eco­logically safe, rights-respecting, and so­cially just fashion are:

  • Formation of an integrated task force by the central government with state government participation for planning, policymaking and monitoring of the implementation of net zero by 2070.
  • Empowerment of the state renewable energy development agencies following the same legal framework and institutional mandate (like electricity reforms mandated-corporatisation of state electricity boards) to speed up the deployment process of renewables and provincial policymaking. As per the current model, SREDAs are registered as companies in some states, societies in some states, and departments in some.
  • Recognition that renewable energy production being sustainable does not mean that renewable value chain is in­herently sustainable. Thus, steps ne­ed to be taken to ensure the value cha­in is also sustainable.
  • Providing equal importance and developing enabling policies and financing sche­mes for decentralised renewables (in addition to utility-scale solar) such as roof­top solar sy­stems for both urban and rural areas, and enabling renewable energy use for livelihood applica­tions/ microenterprise.

Sanjib Pohit

While specific ministries may have road­ maps for technologies concerning their sector, an overall roadmap combining all technologies is needed. The focus is on promoting ethanol blending and biofuels as they are crucial for low-carbon pathways in the short run. The key issue with biofuel policymaking is that the government is moving too fast to persuade the auto manufacturers to make flex-fuel engines. Meanwhile, the blending targets are not being met and abundant biofuel is not available. Therefore, the government cannot expect auto manufacturers to invest in this space so quickly. Further, PPAs should be signed for 24 hours of po­wer supply with developers. With this, solar developers will work towards arr­an­ging RTC supply of energy. Currently, distribution companies have the responsibility to arrange power for the non-generation time period.

Overall, the government should unify various forms of carbon taxes that are levied such as taxes on petroleum and diesel, and coal/clean energy cess, and have a single carbon tax that is an average of these taxes. Such a tax will be more transparent. A detailed cost-benefit analysis sh­ould be carried out by the government on the different forms of carbon taxes currently levied. Ac­cording to me, a simplified and unified carbon tax will give a good signal to the market that the government is serious ab­out expanding renewables. Along with carbon tax, greater incentives for different cle­an energy technologies should continue.

The government should unify various forms of carbon taxes that are levied such as taxes on petroleum and diesel, and coal/clean energy cess, and have a single carbon tax that is an average of these taxes – Sanjib Pohit

Rahul Walawalkar

When we look back at 2021, it will be remembered as a year of many industry-advancing announcements. The important step now is for the announcements to be followed up by implementation so that by the time giga factories are established in India, we will have the strong foundations of requisite skills and capabilities.

With the Advanced Chemistry Cell Production-linked Incentive scheme, India’s domestic industry now has an opportunity to become a part of the global ecosystem. In addition to giga factory investments, India must now focus on localising the supply chain and strengthening international partnerships. Partnerships, which not only assure the exchange of materials or resources but also the transfer of technology and know-how.

We must build strong industry-academia partnerships; nurture a technically skilled labor force; and develop a robust, independent, and honest evaluation process. We also need to focus on safety and green recycling.

Given India’s plan to phase out coal, which alternative non-fossil fuel energy sources (in­cluding hydro and nuclear) or technologies are crucial for ensuring firm clean po­wer? What should be the strategy to re­place coal?

Vaibhav Chaturvedi

There is no silver bullet. If coal has to be phased down in the next two decades, all low-carbon technologies will have to play their part. The list includes solar, wind, bi­o­energy, nuclear, carbon capture and storage, hydro, and geothermal. The strategy to replace coal has to focus on the power sector first, which as of now is the largest user of coal in India and also has alternatives available. An important part of the strategy has to be just transition. High dependence on coal implies mi­llions of jobs and affordable energy. In the transition process, what must be av­oided at all costs is the loss of jobs and increase in energy costs for low-income households. Planning for a just transition has to begin right away.

Somit Dasgupta

Whether India can phase down its coal plants is a function of many things. One of the primary determinants is our load cu­rve. If we continue to have our peak de­ma­nd at 8 p.m., then it has to be seen whether the available renewable capacity can meet that demand. This will only be po­ssible if large-scale batteries are de­ployed, which itself is a function of the cost of storage. Though storage costs have come down drastically, they are still prohibitive when it comes to competing with coal-based generation. In case non-fossil generation cannot meet our peak demand, there is no alternative but to rely on coal-based generation. We cannot really depend on hydro or nuclear for cle­an power as our track record for either has not been too impressive.

Ammu Susanna Jacob and Kaveri Ashok

Since solar is expected to have a major share in the 500 GW target for 2030 and is an intermittent source, the integration of battery and pumped hydro should be promoted to replace coal. Pumped hydro is the oldest and a mature storage technology with the highest installed storage capa­city (96 per cent) globally. The Cen­tral Elec­tricity Authority has estimated a pumped-hydro potential of 96 GW at 63 identified sites in India. Pumped-hydro should be of special interest to India as it remains the most cost-effective, long-te­rm storage op­ti­on despite recent cost re­ductions in ba­tt­eries. In addition, it uses wa­ter as a sto­rage medium as opposed to the expe­nsive and critical materials us­ed in batteries.

Pumped-hydro should be developed along with existing or planned large-hydro that have the geographical advantage of an upper and a lower reservoir. This will redu­ce the overall cost of storage and sa­ve on construction time when compared to stand-alone pumped-hydro. Here, lar­ge-hydro can provide flexible and clean power to the grid while pumped-hydro can provide peaking or ancillary services to the grid or RTC su­pport for a renewable energy plant. This will also further reduce our grid dependency on coal. In addition, nuclear energy offers a reliable fossil-free substitute for coal as a ba­seload energy provider. Furthermore, nuclear energy can be operated flexibly – the Kudankulam light water reactors have this operational capability. Newer designs such as small and modular reactors and other Gen IV reactors are designed with enhanced safety and operational flexibility. Globally, nuclear energy is the second largest source of clean energy.

We strongly believe that a level playing field with decarbonisation/clean energy po­licy instruments such as carbon emission taxes will enable nuclear energy to prove itself a dependable and cost-effective substitute to large fossil fuel plants. Public acceptance and associated construction delays and cost overruns for nuclear plants also need to be dealt with. We need grea­ter awareness of the climate crisis in general, and more specifically, of the pote­n­tial role of nuclear energy in clean energy tran­sition. India should le­verage its long-standing expertise in nu­clear energy in its short- and long-term clean energy pathways.

We strongly believe that a level playing field with decarbonisation/clean energy po­licy instruments such as carbon emission taxes will enable nuclear energy to prove itself a dependable and cost-effective substitute to large fossil fuel plants. – Ammu Susanna Jacob and Kaveri Ashok

Debajit Palit

India being a large country, ensuring firm clean power will require a bouquet of energy sources. Solar and wind energy would be the significant ones. Small to medium capacity hydropower in stand-alone mode or combined with solar or wind power, that is, solar-hydro pumped storage systems, could also be viable so­lu­tions. Nuclear capacity addition will lar­gely depend on the expectations of price competitiveness with the system cost of renewable electricity.

Small to medium capacity hydropower in stand-alone mode or combined with solar or wind power, that is, solar-hydro pumped storage systems, could also be viable so­lu­tions – Debajit Palit

In the case of distributed renewable energy (DRE) solutions, with falling prices of solar PV cells and storage technologies and the advent of intelligent digital technologies, such solutions will play a significant role in enhancing and sustaining electricity access to meet consumers’ demand, both in urban and rural areas. DRE solutions would also be critical to de­mocratise the central grid, empower prosumers through evolving models, fa­ci­li­tate peer-to-peer energy trading, and cr­e­ate electricity markets. In the case of mi­crogrids, a shift from kW-level to sub-MW scale mini-grids, which has already started to happen for agricultural feeders, might be a more viable option to ensure that domestic and productive loa­ds are supported at grid-competitive pri­ces. Going ahead, the mini-grids, interconnected with individual DRE systems at prosumers’ homes, and further connected with the main grid to take and feed electricity, along with decentralised management, are the future.

Going ahead, the mini-grids, interconnected with individual DRE systems at prosumers’ homes, and further connected with the main grid to take and feed electricity, along with decentralised management, are the future – Debajit Palit

Sanjib Pohit

I am not in favour of a sudden shutdown of coal plants. The investment has al­ready been made and it has to be recovered. Also what is the need when carbon capture technologies can be used and new coal plants that are being built use “cleaner” technologies? The pressure for shutdown coal plants is there only from some renewable energy lobby gr­oups. It is perhaps only in India where such suggestions are being floated. To achieve baseload clean energy, fast-neutron nuclear reactors could be promoted. Nuclear projects are also more efficient with grid-balancing and newer technologies coming up, which are even safer. Discouraging nuclear energy is not a good idea. Also, it has to be noted that the construction of large hydro projects in India is not possible given ecological constraints.

Rahul Walawalkar

Around the globe, renewables plus storage are phasing out fossil fuel-based generation and the same can be achieved in India in the coming decade. We need to focus on eliminating/retiring the old/inefficient coal generators that are currently not economical and are being used at very low plant load factors. A starting point is using renewables plus storage to meet peak power requirements for 4-6 hours, which is economical even today. Range of storage technologies such as li-ion and other advanced batteries, gravity-based and thermal storage technologies can enable us to reduce the dependence on coal.

Range of storage technologies such as li-ion and other advanced batteries, gravity-based and thermal storage technologies can enable us to reduce the dependence on coal – Rahul Walawalkar

What is your take on the contentious issues of construction of large hydropower projects in the ecologically fragile Himalayan region and disposal of nuclear waste? Are they a hurdle in achieving the 500 GW non-fossil fuel energy capacity target?

Kaveri Ashok

India follows a closed nuclear fuel cycle, which means we produce a much lower quantity of ultimate nuclear waste for disposal compared to other countries. India adopted this approach primarily to make the most of its scant uranium resources. The ultimate waste disposal is also done following international best practices under the Atomic Energy Act. Nuclear wa­ste disposal should not pose a hindrance to achieving the 500 GW target.

Vaibhav Chaturvedi

It is generally accepted that the potential for expansion of large hydro projects is very limited as far as practical on-ground progress is concerned. So the increase in renewable energy capacity to achieve the 2030 targets is not dependent on large hydro projects, which will play only a marginal role. I do not see this as a threat. Same is the case for nuclear energy. The government policy is heavily in favour of nuclear electricity. More than concerns related to nuclear waste, which are manageable, I am concerned about the cost of electricity from nuclear energy. It is fairly expensive due to the passive safety features. The high cost is indeed a bottleneck for the fast growth of nuclear-based electricity in India.

Rahul Walawalkar

Large hydro has significant environmental challenges and particularly with the changes happening with climate change, we need to be very careful with such projects. We need to focus on ensuring better utilisation of existing hydro assets and with the availability of abundant solar and wind resources in India, we can achieve the 500 GW of non-fossil fuel energy capacity targets with proper planning.

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