With an impressive 500 GW target to be achieved by 2030, India’s clean energy sector is headed for rapid growth. At the forefront of this massive green energy transition is the Ministry of New and Renewable Energy (MNRE), which is responsible for formulating the bulk of the policy frameworks that are enabling the country’s renewable energy expansion. Along with increasing renewable energy capacity deployments, its focus also is on ensuring more inclusive growth for future energy security. Increased efforts are being made to enhance domestic manufacturing capabilities, address long-standing issues relating to transmission, open access power procurement and distributed energy uptake, and to promote the wind and biomass segments. Newer areas of growth such as green hydrogen, offshore wind and energy storage are also being explored and promoted on a significant scale. At a recent industry event, “India @2030: A Roadmap for AatmaNirbhar Bharat in RE”, Indu Shekhar Chaturvedi, secretary, MNRE, spoke about India’s progress in the renewable energy space and the key areas of focus for his ministry. Edited excerpts…
There is substantial evidence that India is expanding faster than its counterparts in the renewable energy sector. Then why is atmanirbharta important for India’s renewable energy sector? There are some sectors that are strategic for India, where we would like to be self-reliant, especially against the backdrop of the current geopolitical considerations as well as excessive reliance on one country for imports. Further, capacity development could be given lower importance in the short term if it means greater holistic growth in the long term.
The renewable energy industry has been identified as a sector for creating self-reliance, not just for power generation but also for equipment manufacturing. We take this theme as our starting point and then see how we can achieve self-reliance. India’s renewable energy sector is linked inextricably to the country’s journey of achieving net zero by the year 2070. It would not be incorrect to say that overall electricity generation and renewable energy will be critical components of this journey. There needs to be a three-pronged strategy: greater electrification of the economy, a greater share of renewables in the electricity mix, and greater energy efficiency. We need to work on all these areas to meet our impressive targets.
It would be interesting to look at our journey so far and identify our strengths as well as the areas that we need to focus on more. If we consider 2014 as the baseline, our renewable energy capacity, including large hydropower, has more than doubled during this time period. Solar power capacity has grown by roughly 20 times. We currently have 166.7 GW of capacity from non-fossil fuel sources, which must be increased to 500 GW by 2030. This is a huge target, and we need to act out of the ordinary to achieve it.
We have identified a few strengths in the renewable energy sector. First, public policy has been supportive. It would not be incorrect to state that the initial capacity additions happened with solar and wind power being procured at quite expensive rates, and this was an element of public policy assistance. This public policy support needs to continue more proactively for achieving our targets.
Second, India has a very strong private sector capacity in the renewable energy sector. Most of the capacity addition in the renewables’ space has come from the private sector. Investments have automatically followed and the government has not had to make any extra effort to attract finance in this space.
Third, we have a strong contractual structure in place with demand aggregation and a transparent bidding procedure. Some states have pioneered their own bidding systems and there is expected to be a stronger movement towards state-specific bids. A strong payment security system, viable long-term tariffs and solid contracting arrangements have developed over the past 10-15 years.
Fourth, we have abundant resource availability in the renewable energy space, including solar and wind, along a with strong grid infrastructure availability.
In terms of the areas that we need to focus on, we need better institutional streamlining. The industry would agree that coordination is an issue in a substantial portion of the renewable energy sector. The generation and transmission elements do not work well together. The electricity sector is part of an immensely fragmented industry that requires some institutional streamlining. The Ministry of Power, the MNRE, the Central Electricity Regulatory Commission, the state regulators and the distribution companies are all a part of the system. Thus, some streamlining must be carried out, and the MNRE has already begun working on it.
We need to move towards a more expansive use of firm power and more storage, which may be accomplished through technological advancement and scaling up. This is already visible in the bids that were recently floated, and it will further gain traction in the future. Storage costs must be reduced since renewable energy integration will become a bigger issue in the future, and energy storage is essential for smooth grid integration. Further, a broader political and governmental consensus is required on the need for the transition to renewable energy. There also needs to be a consensus on bearing higher costs in the short term for gaining greater benefits in the long run.
As discussed earlier, public policy support will continue, especially in emerging areas of growth. Subsidy support is being explored for newer segments such as green hydrogen, offshore wind and energy storage. We must explore all options for increasing renewable energy capacity as the targets are huge and every effort would make a difference.
We are trying to expand capacity in renewable energy parks. The industry has consistently expressed a desire for change in the bidding framework for wind power so that higher capacity additions are possible. India’s wind power segment has been lagging despite adequate demand for wind energy. The bidding process and the overall project allocation mechanism should be examined. Regarding the Great Indian Bustard issue, we have supported the industry in this case in the Supreme Court. Other areas of focus relate to increasing the uptake of biomass, ensuring easier open access transactions for meeting the renewable energy demand and creating a facilitative regulatory framework. These areas need to be worked upon a little more.
Regarding new areas, the hydrogen mission is at the top stage of approval now and we hope to launch it soon. Further, offshore wind tenders should be floated within the next three to four months as the preparatory work has been done.
The development of decentralised renewable power is also important. Capacity additions in the rooftop solar segment have been sluggish. Thus, more work needs to be done in this space. A new portal is to be launched in the next few weeks, which should make rooftop solar uptake less complicated and more streamlined. While the uptake with respect to the PM-KUSUM scheme has been quite slow, it is expected to pick up with feeder-level solarisation gaining traction. We need to focus more on the other decentralised applications in renewables that could provide livelihood opportunities, particularly to women and reduce their drudgery. The problem in this aspect is the coordination between different ministries, the industry and other stakeholders. However, we are trying to resolve this.
For self-reliance in solar manufacturing, the production-linked incentive (PLI) scheme is quite crucial, in addition to initiatives such as the domestic content requirement. The first tranche of PLI has been allocated and has been quite successful. The second allocation, of Rs 195 billion, has been announced in the budget. We have tweaked the PLI scheme a bit although the principal aim remains to encourage the production of high efficiency solar PV technologies in the country and ensure the integration of all production stages. The largest allocation is obviously for fully integrated end-to-end solar manufacturing, and so on for other stages of production. This has been finalised by the ministry and has now gone to the concerned group of senior officials and it may go for cabinet approval soon if required.