India is among the world’s leading countries in terms of producing energy from renewable sources. Currently, renewable sources account for around 35 percent of India’s total installed electricity generation capacity and generates 17 percent of total electricity in the country.
In 2015 at the Paris Climate Summit, India announced a commitment to achieving 40 percent of its total electricity generation from non-fossil fuel sources by 2030. It also set an ambitious new goal of achieving 175GW from renewables by 2022, with 100GW coming from installed solar capacity. A break-up of the target showed wind power generating 60GW, biomass producing 10GW and small hydro power generating 5GW, in addition to 40GW of solar energy generation solely from rooftop units, and another 60GW from large-scale solar projects by 2022.
The country is now aiming for even more ambitious target of 57 percent of the total electricity capacity from renewable sources by 2027 in the Central Electricity Authority’s new strategy blueprint. The 2027 blueprint calls for 275GW from renewable energy, 72GW of hydroelectricity, 15GW of nuclear energy and nearly 100GW from ‘other zero emission’ sources. At the end of third-quarter in 2019, India’s total renewable electricity capacity, including large hydro was 131GW. This represents 35.7 percent of the total installed electricity generation capacity in the country of around 366GW.
India has an ambitious plan to eventually generate most of its power from environmentally green, renewable sources relying largely on ramping up energy sourced from solar and wind power. Initially, the country’s National Solar Mission was to achieve 20GW solar capacity by 2022. Determined efforts by the government to introduce policies and implement plans to boost solar capacity led the country to achieve its goal, and exceed it, four years ahead of schedule. In 2018, the installed solar power capacity of the country was over 26GW, which was also a 56 percent increase compared to installed capacity of nearly 18GW a year earlier.
The plan to achieve 100GW solar generation by 2022 might appear over ambitious, especially considering that the end-to-end solar capacity of the whole world was around 303GW in 2017. However, owing to a highly conducive policy environment from the government, a steady influx of capital, falling prices and major improvements in solar technology in various related fields, including solar thermal power storage, India’s ambitious target is a realistically achievable goal in two more years.
Of the total installed solar capacity to date, large-scale projects accounted for 88 percent and rooftop installations with 4,061 MW constitute the remaining 12 percent. Plans to boost individual roof-top solar power generation received a boost recently with the Ministry of New and Renewable Energy (MNRE) announcing new programs and policies to offer incentives for rooftop solar project commission to the various distribution companies. The rapidly increasing demand for electricity in the remotest corners of the country is also expected to continue the upward trend in rooftop installations.
Latest figures show that at the end of September 2019, the country’s installed solar capacity had crossed 33GW. Though the pace of growth in installed capacity last year had slowed down from that in 2018, it is expected to pick up pace in 2020 when up to 12GW of additional installed capacity, largely from projects already in the pipeline, are likely to come onstream. As the country steadily moved towards achieving its renewable energy goals by 2022, the government upped the ante in 2019 Climate Summit by pledging to double its earlier target and to realize 450GW of renewable energy by 2030.
For a country with a population of 1.3 billion, India’s per-capita consumption of electricity is relatively paltry. With an installed electricity capacity of around 366GW, India’s per capita average electrical energy consumption of 1,181kWh per year was only a quarter of China’s 4,475kWh and negligible in comparison to the US consumption of 12,071kWh per year. However, it is expected that as India undergoes rapid economic development, rising incomes, growing urbanization and a steadily increasing population will lead to a surge in demand for power.
Studies suggest that India’s share of total global primary energy demand is set to roughly double to around 11percent by 2040. To meet this demand India will need to double its electricity output by 2030, while also remaining committed to reduction of its carbon footprint by 35 percent from 2005 levels. This would require roughly half the additional output to come from renewables, which translates to adding 25GW of renewable capacity annually until 2030.
According to data from India’s Economic Survey 2018/19 funding needs for this exponential energy growth is expected to rise from around $76 billion by 2022, to over $250 billion in the 2023-30 period. On an annualized basis,this points to the emergence of investment opportunities of over $30 billion in the next decade and beyond, about three times current levels. This clearly indicates a huge and untapped investment potential.
Most of the country’s power generation currently comes from thermal energy by mining and burning coal, which accounts for nearly 55 percent of Indian power generation. But solar and other renewable sources like hydro power, biomass, wind energy and others are steadily making their presence felt as viable alternatives. Already, today the average price of generating solar electricity has become 18 percent lower than the price of generating electricity from coal-based fuel sources.
According to the US-based Institute for Energy Economics and Financial Analysis (IEEFA), while it is true that India is embracing renewables and new energy technologies due environmental concerns and its responsibility to cut down on the country’s carbon footprint, the main reason could well be the compelling economic benefits to be gained from the rapid expansion of a cheaper electricity supply.
Previously expensive renewable energy prices have dropped by some 50 percent over 2017 for both solar and then wind, while investors offered energy at 2.40-3.00 rupees per kilowatt hour, one of the lowest rates in the Asia-Pacific region. This put domestic renewable energy prices about 20-30 percent below the cost of India’s existing domestic coal-fired power generation costs, and even below the cost of plants powered by imported coal or imported liquified natural gas, said the IEEFA. In addition the bids from investors for renewable energy were not about 20-to-30 percent below the wholesale price of electricity, they were also fixed at a flat rate for 25 years thereby creating a deflationary low-cost electricity system running on zero inflation.
The energy security gains of a reduced reliance on fossil fuel imports are clear, as are the benefits of diversifying India’s electricity system from its historic overreliance on heavily polluting coal-fired power generation. And the benefits extend well beyond its borders, the IEEFA noted.
In 2016, Indian Prime Minister Narendra Modi inaugurated the International Solar Alliance (ISA) of over 120 countries, in collaboration with the French President Francois Hollande at Gurgaon. The primary focus of this organisation is to promote and develop solar energy products particularly in countries in and around the two Tropics.
As India benefits from the shift to domestic renewable energy, other emerging market nations are watching, keen to leverage the same benefits for their own countries. And therein lies a key path to global decarbonization and a much-needed solution to limit global warming, said IEEFA.
Initiatives such as the 10-year tax exemption offered on solar energy projects, greenhouse gas emission reduction policies, as well as the plan to specify regulations for the use of drones in the arena of solar power plants, are just a few steps that the government of India is taking to achieve the energy goals set for 2022.
Solar installations in India increased by 44% in Q3 2019 reaching 2,170 MW, compared to 1,510 MW in Q2 2019. Installations were up by 36% year-over-year (YoY) compared to 1,592 MW in Q3 2018.
Solar installations in the first nine months (9M) of 2019 reached 5.4 gigawatts (GW), a decline of 19%, compared to 6.7 GW of capacity added in 9M of 2018. Of the added capacity in 9M 2019, large-scale projects made up 85% and rooftop installations accounted for 15%.
Rooftop solar installations declined by just 16% quarter-over-quarter (QoQ) in Q3 2019, totaling 245 MW compared to 292 MW installed in Q2 2019. Rooftop solar installations fell by 44% YoY compared to 435 MW installed in Q3 2018.
Solar Installations by Quarter (MW)
According to the report, cumulative installed solar capacity stood at 33.8 GW by the end of Q3 2019. Of the total installed solar capacity to date, large-scale projects accounted for 88% and rooftop installations with 4,061 MW (12%).
Mercom India Research revised its forecast down to ~7.3 GW of solar capacity additions in CY 2019 from the previous estimate of approx 8 GW. This is an annual 12% decrease from 2018 installations of 8.3 GW. Mercom also estimates that for the first time, India will mark 10 GW of annual installations in CY 2020 assuming stable market conditions.
The report attributed the revision in solar estimates for 2019 to a slowdown in rooftop solar installations, partial commissioning of large-scale solar projects and over a gigawatt of projects that were scheduled to be commissioned in the third and fourth quarters have been postponed to 2020 for various reasons.
“India has tremendous potential in renewable energy and the government’s goal of installing 175 GW of renewable energy, 100 GW of which is solar capacity, by 2022 looks achievable with the right policies and participation of the industry,” Mathur added.
We are also seeing numerous solar inverter companies trying to make a mark in a price-sensitive market like India. According to Mercom’s India Solar Market Leaderboard 1H 2019, the top five inverter suppliers made up over 73% of the Indian market share.
“We have high expectations for India’s rooftop solar market. In 2020 we are seeing increasing competition in the pricing of solar inverters, and we’ll continue to cope with these challenges by strengthening our advantages in R&D and product innovations,” commented Rucas Wang, regional director at Growatt.
“The improved outlook for 2020 is due to a stronger existing project pipeline and not because the market fundamentals have changed. Even though it will take time for the economy to stabilize, enforcing renewable purchase obligations, shoring up finances of DISCOMs so they can pay the developers on time, and facilitating lending will put the solar industry back on the growth path so it can continue generating clean power, decrease pollution.
