Sun and wind dominate India's renewable sector, securing nearly 90% share

Posted on 25 Feb 2024

India has become a leading player globally in the mass deployment and usage of renewable energy, driven by objectives of decreasing carbon emissions and increasing energy security. The sector has witnessed immense growth in recent years, spearheaded by greater investments in solar and wind power and their enabling technologies. The country has set ambitious goals for renewable energy, such as having 500 GW of power from sources other than fossil fuels by 2030. To meet this goal, it has put in place policies and programmes that encourage investment in renewable energy and make it easier to get permission for projects. The nation has embraced new technologies to make renewable energy more efficient and dependable.

Graphs courtesy: Central Electricity Authority (CEA)

India has positioned itself as a leading advocate for a sustainable and environmentally friendly energy landscape, driving the global shift towards renewable energy. As of January 2024, solar power constitutes 55% of the country’s total renewable installed capacity, amounting to 74.3GW. This significant transition underscores India’s steadfast dedication to promoting a cleaner and more sustainable future.

As of January 2024, India has amassed a substantial total installed renewable capacity of about 135GW, with contributions from wind power, small hydropower, biomass, and waste-to-energy sources. Notably, solar and wind power capacities combined make up roughly 88% of the total renewable capacity, excluding large hydropower. This reiterates India's leading position in the adoption of renewable energy sources.

Between January and December of 2023, the country marked a significant milestone in its renewable energy trajectory, as the installed capacity of solar photovoltaic (PV) systems exceeded 10 GW. This milestone reflects the nation's accelerated advancement and increasing traction in adopting solar energy as a vital element of its energy composition.

In 2022, India's renewable energy sector witnessed significant growth, with wind and solar power capacity increasing by 17% compared to the previous year. According to Ember, an energy research organization, the total renewable energy capacity added in 2022 was 15.7 GW, accounting for 92% of the overall new power capacity installed. This surge in renewable energy, as per the report, is expected to continue, with Rajasthan and Gujarat leading the way. Rajasthan aims to reach 90 GW of renewable energy capacity by 2030, while Gujarat targets 61 GW.

Through financial reward schemes, tax breaks, and subsidies, solar projects have gained considerable investments across both public and private sectors. Similarly, the adoption of a competitive pricing system through competitive bidding processes has caused the reduction of solar power tariffs, which has improved the business economics of solar power ventures.

The diminishing expense of solar technology has been a transformative force, driving its extensive adoption throughout the nation. Progress in solar PV technology, alongside expanded manufacturing capacity, has notably decreased the cost of solar panels. This trend has heightened the appeal of solar power for both developers and investors.

Increasing module assembly production capacity significantly reduces production costs . For instance, doubling the capacity from 600 MW to 1.2 GW leads to a 9.4% cost reduction, and quadrupling it to 2.4 GW results in a substantial 21.9% reduction. Lowering solar equipment prices will encourage more users to adopt solar energy. Enhanced price competitiveness will also strengthen India's position in the global solar market. Furthermore, expanding operations enables companies to allocate more resources to in-house research and development, thereby promoting technological advancements, improved efficiency, and ultimately reduced costs.

The Ministry of New and Renewable Energy (MNRE) recently announced the reinstatement of the Approved Models and Manufacturers of Solar Photovoltaic Modules (ALMM) Order, slated to come into effect on April 1st, 2024. This directive is geared towards regulating solar PV modules, particularly for government-sponsored or subsidized projects, with the overarching goal of upholding quality and reliability standards in solar installations.

The 2024 interim budget firmly emphasizes the transition toward sustainable energy sources, primarily solar, wind, and green hydrogen. This commitment aims to achieve a carbon-neutral future by 2070. The interim budget has set a near-term goal of reaching 500 GW of electricity generation from non-fossil fuel sources by 2030. The financial outlays for renewable energy schemes continue to grow, and this budget shows a doubling of the allocation for solar energy alone. This strategic prioritization demonstrates the government's resolve in transitioning to cleaner energy sources and combating climate change.

A significant trend observed in India's solar energy sector is the decentralization of power generation, notably through the adoption of rooftop solar installations. These installations – boasting an impressive capacity of over 11GW across homes, businesses, and industrial buildings – not only bolster energy security but also empower individuals and enterprises to actively participate in cleaner energy production.

In rural regions where access to electricity is frequently restricted, solar power has emerged as a vital resource, significantly improving livelihoods and spurring economic progress. Off-grid solar solutions such as solar lanterns and microgrids have successfully provided electricity to isolated communities, thereby raising living standards and promoting inclusive development.

The country’s achievement in solar energy underscores the collaborative efforts of government initiatives, technological advancements, and heightened awareness of the environmental and economic advantages of renewable energy. With solar energy contributing to about 55% of the total renewable installed capacity, India exemplifies how collective endeavours towards sustainability can yield concrete outcomes in the transition to clean energy.

With India's ongoing emphasis on solar power, it stands ready to assume a pivotal and influential position in shaping the trajectory of the global renewable energy arena. Its commitment has the potential to inspire nations across the globe to harness the power of the sun, thereby promoting widespread adoption of solar energy on a global scale.

This means that, if India maintains its current pace and rate of investment in the sector, it will be able to provide electricity for all those who need it by 2030. Besides an effort to avoid carbon emissions, which may cause the global warming and thus result into climate change; the country is also working tirelessly towards maximizing investments in renewable energy especially solar power.

A recent study by Climate Analytics, a respected climate change research organization, emphasizes the need for substantial investments to triple renewable energy capacity by 2030 in alignment with COP28 agreements. The study estimates that US$8 trillion should be invested in new renewable energy sources and US$4 trillion in grid and storage infrastructure. This equates to an average annual investment of US$2 trillion worldwide to achieve the desired objective.

The report stresses that the recommended yearly financial commitment of US$2 trillion for renewable energy sources should not be seen as a simple expense but as a strategic determination. It demonstrates that the global spending on fossil fuels is expected to rise above US$6 trillion in the coming ten years, which indicates that redirecting these resources into sustainable energy sources provides a safer and more beneficial option.

India aims to generate 500 gigawatts of energy from non-fossil fuel sources by 2030. This target has sparked innovative methods for harnessing renewable energy. Solar and wind power are leading the way, but they fluctuate and depend on the weather, making it difficult to manage the power grid. To address this, the concept of Renewable Energy Round-the-Clock (RE-RTC) has gained traction. This strategy involves combining renewable sources with storage systems, like batteries or pumped storage hydroelectricity, to provide a continuous and reliable supply of electricity.

Thus, the rise in renewable energy capacity is poised to notably enhance battery storage capacity. It is projected that by fiscal 2028, approximately 4GW of battery storage systems will be operational, representing a substantial increase from the current capacity. This surge is largely credited to government initiatives like viability gap funding (VGF), which aim to lower project costs and improve returns for developers. Due to a combination of factors, standalone projects are expected to experience significant growth, resulting in improved returns.

This growth is driven by a notable decrease in battery prices, estimated to be around 20% annually. Additionally, government grants and support play a role in improving the returns of these projects, with anticipated rates reaching 12-13%.

The renewable energy sector of the country is expected to grow significantly in the coming years thanks to technological advancements. Perovskite solar cells, which could be more efficient and cost-effective than traditional silicon solar cells, are showing promise. Bifacial solar panels, which can absorb sunlight from both sides, are also gaining popularity. Tunnel Oxide Passivated Contact (TOPCon) technology began mass production in 2019, and heterojunction solar cell technology, which combines crystalline silicon and amorphous silicon, has made a significant impact on the solar energy industry.

At present, coal maintains its dominant position, representing 48.4% of the total installed power capacity, which stands at approximately 430 GW. Contributions from gas and lignite stand at 5.8% and 1.5%, respectively. Non-fossil fuel sources collectively constitute 55.9% of the total installed power capacity, with nuclear energy contributing 1.7%, large-hydro at 10.9%, and renewable sources making up the remaining 31.26%.

Notably, within the renewable energy category, solar energy holds a significant share, accounting for 17.3% of the overall installed power capacity.

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