Renewable Energy Industry in India

Introduction

Indian renewable energy sector is the fourth most attractive renewable energy market in the world¹. India is ranked fourth in wind power, fifth in solar power and fifth in renewable power installed capacity as of 2018.

Installed renewable power generation capacity has gained pace over the past few years, posting a CAGR of 17.33% between FY16–20. With the increased support of Government and improved economics, the sector has become attractive from investors perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role. The government is aiming to achieve 225 GW of renewable energy capacity (including 114 GW of solar capacity addition and 67 GW of wind power capacity) by 2022, more than its 175 GW target as per the Paris Agreement. The government plans to establish renewable energy capacity of 500 GW by 2030.

Market Size

As of August 31, 2020, installed renewable energy capacity stood at 88.79 GW, of which solar and wind comprised 35.73 GW and 37.99 GW, respectively. Biomass and small hydro power constituted 10.14 GW and 4.73 GW, respectively. By December 2019, 15,100 megawatts (MW) of wind power projects were issued, of which, projects of 12,162.50 MW capacity has already been awarded². Power generation from renewable energy sources in India reached 127.01 billion units (BU) in FY20.

In 2019, India installed 7.3 GW of solar power across the country, establishing its position as the third-largest solar market in the world.

With a potential capacity of 363 GW and with policies focused on the renewable energy sector, Northern India is expected to become the hub for renewable energy in India.³

Investments/ Developments

According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflow in the Indian non-conventional energy sector stood at US$ 9.22 billion between April 2000 and March 2020. More than US$ 42 billion has been invested in India’s renewable energy sector since 2014. New investment in clean energy in the country reached US$ 11.1 billion in 2018.

Some major investments and developments in the Indian renewable energy sector are as follows:

• The Solar Energy Corporation of India (SECI) implemented large-scale central auctions for solar parks and has awarded contracts for 47 parks with over 25 GW of combined capacity.
• In April 2020, Vikram Solar bagged a 300 megawatt (MW) solar plant project for Rs 1,750 crore (US$ 250.39 million) from National Thermal Power Corporation Ltd (NTPC) under CPSU–II scheme in a reverse bidding auction.
• Adani Group aims to become the world’s largest solar power company by 2025 and the biggest renewable energy firm by 2030.
• Around Rs 36,729.49 crore (US$ 5.26 billion) investment was made during April-December 2019 by private companies in renewable energy.
• Brookfield will invest US$ 800 million in ReNew Power.
• ReNew Power and Shapoorji Pallonji will invest nearly Rs 750 crore (US$ 0.11 billion) in a 150 MW floating solar power project in Uttar Pradesh.
• In November 2019, Renew Power, Avaada, UPC, Tata unit won solar projects in 1,200 MW auction of the Solar Energy Corp of India.
• As of 2019, India was set to open its solar power plant, Bhadla Solar Park in Rajasthan, which would be world’s largest solar plant with a capacity of 2,255 MW.
• As of March 2019, Eversource Capital, a joint venture between Everstone and Lightsource planned to invest US$ 1 billion in renewable energy in India through its Green Growth Equity Fund.
• The international equity investment in the India’s clean energy sector was US$ 283 million in 2016, US$ 532 million in 2017 and US$ 1.02 billion in 2018.

Government initiatives

Some initiatives by Government of India to boost India’s renewable energy sector are as follows:

• In August 2020, the government announced plans to offer land near its ports to companies for building solar equipment factories.
• India plans to add 30 GW of renewable energy capacity along a desert on its western border such as Gujarat and Rajasthan.
• Delhi Government decided to shut down thermal power plant in Rajghat and develop it into 5,000 KW solar park
• Rajasthan Government, in Budget 2019–20, exempted solar energy from electricity duty and focussed on the utilization of solar power in its agriculture and public health sectors.
• A new Hydropower policy for 2018–28 was drafted for the growth of hydro projects in the country.
• The Government of India has announced plans to implement a US$ 238 million National Mission on advanced ultra-supercritical technologies for cleaner coal utilisation.
• The Ministry of New and Renewable Energy (MNRE) has decided to provide custom and excise duty benefits to the solar rooftop sector, which will lower the cost of setting up as well as generate power, thus boosting growth.
• Indian Railways is taking increased efforts through sustained energy efficient measures and maximum use of clean fuel to cut down emission level by 33% by 2030.

Road Ahead

The Government is committed to increased use of clean energy sources and is already undertaking various large-scale sustainable power projects and promoting green energy heavily. In addition, renewable energy has the potential to create many employment opportunities at all levels, especially in rural areas. The Ministry of New and Renewable Energy (MNRE) has set an ambitious target to set up renewable energy capacities to the tune of 225 GW by 2022, of which about 114 GW is planned for solar, 67 GW for wind and other for hydro and bio among other. India’s renewable energy sector is expected to attract investment worth US$ 80 billion in the next four years. About 5,000 Compressed Biogas plants will be set up across India by 2023.

It is expected that by 2040, around 49% of the total electricity will be generated by renewable energy as more efficient batteries will be used to store electricity, which will further cut the solar energy cost by 66% as compared to the current cost. * Use of renewables in place of coal will save India Rs 54,000 crore (US$ 8.43 billion) annually³. Renewable energy will account for 55% of the total installed power capacity by 2030.

Note: 1- According to Renewable Energy Country Attractiveness index 2018 by EY;
2- As per data from the Economic Survey; *According to the Bloomberg New Energy Outlook 2018; 3 – Greenpeace India, Union Budget 2020 21, SPV – Solar Photovoltaic System, MWeq - Megawatt Equivalent

Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.