This is an extract from the report “24/7 CarbonFree Energy Procurement in APAC: Pathways for Companies and Countries” by BloombergNEF. In this extract, we specifically focus on India.
Global greenhouse gas emissions have continued to rise due to the increase in unabated fossil fuel combustion for energy. APAC’s share of global emissions has almost doubled from 25% in 1990 to 47% in 2021. Provisional recent data from the UN Environment Programme suggests this trend is continuing. To meet the Paris Agreement goal of keeping the average rise in global surface temperature to well below 2 degrees Celsius by the end of the century compared to pre-industrial levels, global emissions need to decline by at least 25% by 2030 relative to 2019 levels, on the way to reaching net zero by mid-century.
Globally, the power sector is the single largest source of emissions. To fulfill the Paris Agreement goal, BloombergNEF’s New Energy Outlook (NEO) shows renewables will be the single most important lever in tackling emissions from fossil fuel combustion. The Paris-aligned NEO Net Zero Scenario (NZS) shows renewables directly account for 39% of emissions avoided between today and 2050, compared with a no-transition scenario where there is no further action on decarbonization.
The electrification of end-use sectors, including road transport, buildings and industry, powered by an increasingly cleaner electricity supply, account for another 23%. Clean hydrogen produced via electrolysis and energy efficiency primarily enabled by increased electrification account for an additional 11% of emissions abatement. In total, renewables, directly and indirectly, would enable almost three quarters of emissions abatement needed by 2050.
Early emissions reductions are crucial to meet the Paris Agreement goal. Under the NEO NZS, the period 2024-2030 is dominated by rapid power-sector decarbonization. Wind and solar capacity additions are responsible for half of emissions abatement during this seven-year period.
Under NZS, cumulative renewables capacity triples from 2023 to 2030 and then triples again from 2030 to 2050. Fossil fuel generation meanwhile falls almost 60% between today and 2030. By 2040, unabated fossil fuel generation needs to be effectively phased out. The power system under the NZS shifts from relying on unabated baseload fossil fueled thermal power plants, to one dominated by renewables.
Solar and wind alone provide almost three-quarters of all electricity in 2050. The dominance of solar and wind is driven by their economic competitiveness and scalability. Since 2017, the global levelized cost of electricity generation benchmark for new solar and onshore wind power plants has been lower than new thermal power plants. Battery-based energy storage systems have also become economically viable thanks to cheaper lithium-ion batteries. Under the NZS, the share of electricity supplied by all renewables combined (including hydro, biomass, geothermal and other renewables) rises to 81% in 2050.
Under Paris-aligned Net Zero Scenario electricity demand growth is led by corporations
Compared with 2023, electricity demand in the NZS more than triples to just under 78,000 TWh in 2050 from 25,000 TWh. Industry and buildings are the two largest consumers of electricity in 2050, with 31% of total demand each. Most industrial demand growth comes from sectors with low heat needs, such as food processing, machinery, and pulp and paper, but chemicals and cement production also see an increase as they partly electrify their processes. The single largest source of new demand for electricity is from electrolyzers used to produce hydrogen. Even though hydrogen ‘just’ contributes 3% toward emissions abatement over 2024- 2050, its production takes up about 16,500TWh, or 19%, of electricity demand in 2050. Hydrogen from electrolysis beats other production methods on cost from the 2030s in all markets. The majority of electricity demand growth under the NZS will come from commercial and industrial activities led by corporations. And enabling clean power procurement options for corporations will be critical to funding the power capacity and grid expansion needed under the NZS.
Under NEO NZS, renewables – which include biomass, hydro, geothermal, solar and wind technologies – account for the largest portion of power sector investment by 2050, at almost $23 trillion, with solar and wind collectively taking up 94% of this total. Around $7.1 trillion of renewables investment is called for in the remainder of this decade as the world aims to hit the COP28 pledge of tripling renewable energy capacity by 2030, relative to a 2022 baseline.
Achieving net-zero emissions globally by 2050 calls for $21.4 trillion in power grid investment to support the build-out of renewables and energy storage. Corporate clean energy procurement will be a critical source of funding to meet the increased power capacity and grids investment required under the NZS.
24/7 CFE technology pathways in India
Thermal power plants led by coal supplied 78% of India’s 2023 electricity, while renewables accounted for 19%. Under NEO NZS, by adding 377GW of new renewable capacity – 282GW of solar, 75GW of wind – and 112GW of energy storage over the period of 2024-30, India would raise renewables’ annual share of electricity supply to 45% by 2030, while meeting growth in electricity demand. Continued expansion of renewables and energy storage capacity enables renewables alone to supply 75% of annual generation in 2040 and 84% in 2050. The share of hourly electricity demand met by renewables widely varies due to both demand-side changes such as higher air conditioning demand during hotter months as well as daytime over nighttime, as well as supply-side hourly and seasonal changes e.g., higher solar generation around noon as well as during dry clear days. In 2023, the share of hourly demand met by renewables in India ranged from as low as 7% to as high as 48%.
Under NEO NZS, the range of hourly demand met by renewables in India steadily improves to reach an average of 84% by 2050. By the early 2030s, the majority of hourly electricity demand is already matched with renewables. As a result, many corporations would be able to achieve significant 24/7 CFE progress by relying on renewables and energy storage capacity. For energy storage, while lithium-ion batteries will be helpful for shorter durations (4 hours or less), long-duration energy storage technologies such as pumped hydro will be critical for overcoming challenges during days of low solar and wind generation.
For a corporation to achieve 24/7 CFE procurement, it will need a mix of renewables complemented with energy storage and low-carbon dispatchable power to ensure each hour of demand is met with clean electricity supply. The same principle applies to decarbonization of a country’s power system. In the case of India, utility-scale solar and onshore wind will become the dominant sources of power, accounting for 41% and 32% of electricity generation in 2050, respectively. While rooftop solar only provides 5% of annual 2050 electricity generation under the NZS, it still plays a critical role as an onsite source of clean electricity closest to demand. Thanks to its high onshore domestic renewable potential, the need to rely on offshore wind in India is more limited. Still, the round-the-clock performance of offshore wind will benefit corporate customers in coastal regions.
To complement solar and wind, India will need to scale up energy storage and low-carbon dispatchable capacity by 20x within this decade from the current low base of 12 GW dominated by nuclear power and pumped hydro. Battery-based energy storage systems are the most economic option that can be deployed quickly. Longer term, India will also need more long-duration energy storage options such as pumped hydro.
Within this decade, India will need $853 billion for clean power capacity expansion and $178 billion for the grid to get its power system on track for decarbonization by 2050. Enabling 24/7 CFE procurement can provide a critical source of funding.
Over the last 10 years, India’s clean energy auctions have been very successful in efficiently channeling funding to accelerate deployment of utility-scale solar and onshore wind. In recent years, the introduction of new auction designs requiring delivery of clean electricity in specific hours of the day have led to growth in deployment of a portfolio of solar and wind assets complemented with batteries and pumped hydro. India can continue to evolve its auction design to also enable more corporate investment in low-carbon dispatchable power and the grid.
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