Interview with A. Nithyanand: “Renewables are growing at a faster rate in India than in any other major economy”

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.