In a recent interview with Renewable Watch, A. Nithyanand, chief executive officer, Sembcorp Green Infra (India), talked about the current state of the power sector as well as the energy transition and the commercial and industrial (C&I) market. He also highlighted Sembcorp’s key achievements and future focus areas. Edited excerpts…
What is your assessment of the current state of the power sector in the country?
The economic rebound post Covid-19, along with improved consumer sentiment, has made India the fastest growing major economy in the world. The government’s focus on electrification as well as urbanisation and industrial expansion led power consumption to rise about 10 per cent year on year, to reach 1,512 BUs for the financial year ended March 2023.
Universal access to electricity and increased electricity usage for industrial as well as domestic consumption will see power demand continuing to spike across the country. To support this demand surge, substantial efforts have been made to strengthen the power generation capacity and improve the transmission and distribution infrastructure. Backed by rapid technological advancements and continued government support, the total generation capacity has reached 416 GW as of March 2023, with the private sector contributing nearly 51 per cent of the total mix.
India’s ambitious decarbonisation targets have accelerated the adoption of renewable energy. The global consensus reached during the recent G20 summit, wherein all the countries aimed to triple renewable energy capacity by 2030 and focus on technological development to move towards low-emission energy, will further boost India’s energy transition efforts.
Positive policy interventions, such as the Electricity Amendment Rules, 2023, have paved the way for reforms and improved efficiency within the sector. In the renewable sector, particularly, several policy initiatives were undertaken to increase electricity generation, such as the waiver of ISTS charges for interstate sale of solar and wind power for projects, the declaration of a trajectory for renewable purchase obligations up to the year 2029-30, laying of new transmission lines and creation of new substation capacity under the green energy corridor scheme. These were some of the major highlights. Further, the Late Payment Surcharge Rules, 2022 have been significant in bringing financial viability to the sector by ensuring timely payments.
How do you rate the performance of the power sector in advancing energy transition? What more needs to be done?
The country’s target to become energy independent by 2047 and net zero by 2070 will require increasing renewable energy use across all economic spheres. Over the past few years, the performance of the power sector in driving the energy transition has been commendable. India has demonstrated a strong commitment by actively investing in renewable energy projects, resulting in a substantial surge in capacity.
Led by a conducive policy environment, the renewable energy industry has witnessed rapid growth over the past decade. The government has taken proactive steps to meet the renewable energy targets, resulting in a substantial surge in renewable capacity in recent years. At 172 GW (as of March 31, 2023), India has the fourth-largest renewable energy capacity in the world, with the fastest addition among all major countries. In financial year 2023, India added a net power generation capacity of 16.6 GW. It was primarily dominated by renewable energy (15.3 GW) and conventional energy (1.2 GW).
The installed solar energy capacity has increased by more than 24 times in the past nine years and stands at 67.07 GW as of July 2023. The installed renewable energy capacity (including large hydro) has increased by around 128 per cent since 2014.
Wind and solar continue to be attractive investment avenues for various stakeholders. India enjoys the lowest cost of large-scale solar power in the world, which has decreased by 84 per cent since 2010. The cost of wind power has fallen by 49 per cent in the past decade. This has led India to emerge as one of the most attractive destinations for clean energy investment, with foreign direct investment in India’s renewable energy sector soaring to Rs 20.5 billion in the third quarter of financial year 2023.
Green hydrogen will play an important role in enabling this transition, whether in the form of long-duration storage of renewable power or the replacement of fossil fuels in energy-intensive industries. The demand for hydrogen is expected to reach 28 metric tonnes by 2050, while the cost of hydrogen from renewables will fall by 50 per cent by 2030. Policies such as the Green Hydrogen Policy and the National Green Hydrogen Mission will help position India as a green hydrogen manufacturing hub.
With these initiatives, India is well placed to meet its renewable energy targets of 500 GW of non-fossil-fuel-based energy and reduce the carbon intensity of the country’s economy by less than 45 per cent by 2030.
What is your outlook for the C&I market for renewables?
Industries account for almost 50 per cent of India’s power consumption. The growing focus on sustainability and environmental stewardship has spurred businesses to actively pursue renewable energy solutions. We anticipate a robust expansion of this market, driven by favourable policies and the increasing cost-effectiveness of renewable technologies.
The Green Energy Open Access Rules, 2022 have addressed important issues faced by the industry, such as open access, banking and time-bound clearances. By allowing consumers with a sanctioned load of 100 kW to purchase power directly from renewable energy producers, the market has the potential to grow multifold in the coming years. Further, by mandating open access to be provided within 15 days and capping the surcharge at 20 per cent, renewable energy has been made cheaper and more accessible.
The avenue of renewable power procurement through open access provides a compelling alternative for the C&I segment, offering economically feasible and cost-effective options. Notably, C&I consumers across diverse industries, including steel, automotive, polymer, hospitality, retail and realty are actively harnessing the potential of renewable energy for their operations. This not only signifies a positive shift towards sustainability but also highlights the economic viability of such endeavours. However, this also poses a challenge for the renewable sector to supply schedulable round-the-clock (RTC) power. This would require innovation in terms of technology as well as contracting, which would ultimately benefit the grid.
What are the measures needed to promote a circular economy and sustainable operations in renewable energy?
Embracing a circular economy for renewable energy holds the potential of diminishing emissions and alleviating the strain on our natural resources, paving the way for inventive routes to attain net-zero economies, spurring sustainable economic expansion, generating employment opportunities and mitigating supply chain vulnerabilities. Close collaboration among diverse stakeholders will be key to advancing this cause. This entails the adoption of efficient recycling and disposal protocols for components reaching the end of their useful lives, promotion of resource efficiency during manufacturing processes and endorsement of a comprehensive life-cycle approach when embarking on renewable energy projects.
As the energy transition gains pace, other innovative technologies and business models need to be explored to expedite the adoption of increasing amounts of low-cost but intermittent renewable energy. Hybrid projects are fast emerging as viable new renewable energy systems in India as well as in several other markets around the world.
Developing countries need to be supported in their transition to low-carbon or low-emission economies and low-cost financing should be facilitated. International collaboration and knowledge-sharing between governments, businesses and civil society will be critical to meeting the transition to net zero, especially for developing nations. Collaboration in new technologies that improve efficiency, electrification, grid expansion and flexibility will be particularly important for decarbonising heavy industry and long-distance transport sectors.
Energy storage will also have an important role to play in accelerating the energy transition by helping balance out the variability in renewable energy generation. Further, the intermittencies of renewable energy can be well managed through renewable hybrids to produce RTC clean energy. RTC renewable energy will become more affordable as green hydrogen starts getting produced for storage.
What have been the key business highlights of Sembcorp in the past one year?
Globally, Sembcorp has a balanced energy portfolio of 19.4 GW, with 11.9 GW of gross renewable energy capacity, comprising solar, wind and energy storage. One-fourth of that is in India, accounting for more than 3.1 GW of renewable energy. With more than 12 years of operations in the country and a presence across 18 major states, Sembcorp is well positioned to contribute to India’s energy transition.
As a pioneer in C&I power supply in the country, we offer tailored solutions to our customers under various business models in physical and virtual supply agreements for wind, solar and hybrid solutions. Enabling Indian manufacturing to go green will continue to remain our focus across states.
We have bolstered our presence in the group captive segment by attracting new customers. Remarkable progress has been made in our projects in Tamil Nadu, Karnataka, Rajasthan and Gujarat. Our cutting-edge 3.3 MW wind turbines installed in Tamil Nadu, being executed under the self-development model, are among the tallest in India.
We have embarked on several greenfield and self-development renewable energy projects in Tamil Nadu, Karnataka, Rajasthan and Gujarat, which would supply energy directly to C&I consumers. Some of these projects are already operational, demonstrating our commitment to support the industry’s carbon neutrality goals and assist the green momentum. Besides commissioning several renewable energy projects to actively support India’s pursuit of clean energy objectives, our focus has been on integrating technology and pursuing operational excellence. It has helped bolster our standing in the market.
Our acquisition and integration of 583 MW of renewable assets in India has balanced our resource portfolio to 35 per cent solar and 65 per cent wind, as well as expanded our presence.
What are your top priorities and key focus areas? What are some of the new opportunities that the company is pursuing?
As a leading Asian energy and urban solutions provider, Sembcorp is driven by its purpose to do good and play its part in building a sustainable future. Our expertise and experience in the renewable business give us a strategic and technical edge. This becomes invaluable in our operations in India, which remains one of the most attractive renewable markets.
We intend to continue focusing on growing our renewable capacity through value-creating investments, including greenfield projects, as well as expansions and acquisitions. Our focus will remain on innovation, research and development and the deployment of advanced technologies to continue to drive our business performance. As a company, we focus on the active development of in-house technologies that further improve our remote monitoring, predictive asset management, analytics and energy forecasting capabilities to maximise the efficiency of our assets.
In the operations and maintenance (O&M) space, we have achieved significant improvement in the way we optimise our assets. Our focus remains on further enhancing our capabilities to get better asset performance and returns for our South Asian business and Sembcorp globally. Sembcorp’s strong in-house capability in asset management through self-O&M is established. Our ability to deliver complex projects under the self-development model, while adhering to timelines and costs, underlines our strong execution capabilities.
We will continue to grow our wind and solar portfolios through bids with strong intermediaries such as the Solar Energy Corporation of India. With our strong in-house capabilities and pan-geography expertise, we will explore venturing into regional as well as global markets to further optimise our resource portfolio. As India pursues a low-carbon future, Sembcorp India is well positioned to support the nation’s energy transition with its suite of renewable solutions.
What is your outlook for the power sector?
The outlook for the power sector in India remains highly optimistic. With the government’s strong commitment to renewable energy and sustainability, we anticipate a continued shift towards cleaner sources of power. Grid infrastructure development and advancements in energy storage will be critical focus areas for the sector’s future growth and stability.
Renewable electricity is growing at a faster rate in India than in any other major economy, with new capacity additions on track to double by 2026, as per the International Energy Agency. Investments in large-scale renewable projects will strengthen the sector and contribute to the low-carbon transition. India is well positioned to become a leader in renewable batteries and green hydrogen, which, together with other low-carbon technologies, has the potential to create an $80 billion market in India by 2030. Green hydrogen will be a key component of the renewable shift, with its significant potential for energy storage, clean industry and sustainable transportation. India has the potential to emerge as a global leader in the space, bolstering self-reliance, exports and economic growth.
Steady policy support, technological innovations, increased investments and a vibrant private sector will see India emerge a global leader in renewable energy. This will help the country move closer to its vision of energy security and sustainable economic development.