What's behind the surge in demand for renewables in India?

Stimulus for utilities, extension of project commissioning deadlines and domestic manufacturing initiatives help boost industry outlook.

Even as the coronavirus pandemic wreaked a healthcare havoc in India over the past year, the country’s renewable energy sector recorded an unprecedented surge in demand.

The country awarded landmark supply contracts for flexible renewable power, an important step in addressing the limitations of intermittent wind and solar power. Cheap renewables were favoured on the energy grid last year, while stimulus measures for utilities, an extension to project commissioning deadlines, and domestic solar manufacturing initiatives also helped to bolster the outlook for renewables.

“The energy transition is gathering speed,” said Aarti Khosla, founder and director of Climate Trends, a Delhi-based strategic communications initiative, and former communication lead for WWF India. “It's no more a question of if the transition will happen or not. It's only a question of what the pace of the transition will be,” she said.

Fast pace of transition

Indeed, the pace of transition is in keeping with Indian Prime Minister Narendra Modi’s speech at the United Nations Climate Ambition Summit in last December, where he declared that India is on track to reach, and ultimately exceed, its ambitious renewable energy targets.

“India has reduced its emission intensity by 21 percent over 2005 levels,” he said at the virtual event, which marked five years since the adoption of the Paris Agreement on Climate Change. “Our renewable energy capacity is the fourth largest in the world. It will reach 175 gigawatts before 2022.”

India’s total installed capacity of renewable energy, not including hydropower, currently stands at 90 gigawatts. According to a year-end review by the Ministry of New and Renewable Energy, another 49.59 gigawatts of renewable energy capacity is under installation, and an additional 27.41 gigawatts of capacity has been tendered. This puts the total capacity of renewable energy projects already commissioned or in the pipeline at nearly 167 gigawatts.

Exceeding Paris targets

Modi recently announced that he expects the country’s clean energy capacity to reach 220 gigawatts by 2022 with the inclusion of hydropower — besting the country’s 175-gigawatt target. India has an even more ambitious target of 450 gigawatts of renewable energy capacity by 2030, by when the government wants to meet half of the country's power demand with renewable energy resources.

“India is not only on track to achieve Paris targets but to exceed them beyond your expectations,” Modi said at the climate summit.

While the momentum for renewables in India – along with the government’s clear embrace of new energy alternatives – is undeniable, renewables in electricity must increase 55-fold for India to achieve net-zero emissions by 2050, according to a report by Council on Energy, Environment and Water (CEEW).

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Focus on non-hydro power sources

The study found that India will need to generate at least 83 per cent of its electricity from non-hydro power renewable energy sources by 2050 to achieve net-zero greenhouse gas emissions by the middle of the century – thereby implying a massive increase in the use of non-hydro renewables in electricity generation within the coming 30 years, from only 160 Terawatt-hour (TWh) in 2019.

Further, to achieve net-zero by 2050 the share of electricity in India's industrial energy use must rise three-fold, from 20.3 per cent in 2018 to 70 per cent in 2050, the study revealed. The share of electric vehicles in passenger car sales will also have to rise to 76 per cent by 2050 from just 0.1 per cent in 2019, it added. These estimates are based on CEEW's best understanding of progress on mitigation technologies.

While there’s certainly a long journey ahead for the sector, in 2019 India was ranked fifth in wind power, fifth in solar power and fourth in renewable power installed capacity. As the fourth most attractive renewable energy market in the world, India’s renewable energy sector is thus ripe for a rapid growth and investments trajectory.