Charting India’s Renewable Energy Future Through Public-Private Partnership

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Masdar blogging contestEditor’s Note: This article is one submission in a live Masdar blogging contest. Very simply, the focus of the contest submissions is to answer the question: “In your view, what are the policies that governments should take to encourage public-private partnership and enable the private sector to develop the goods and services necessary for a global transition to a low-carbon economy by 2030?”

India will soon be one of the world’s largest renewable energy markets. The Indian government has announced massive capacity addition targets which, if achieved, could very well put India among the top 2 renewable energy markets in the world, alongside China.

India has announced plans to have 100 GW solar power and 60 GW wind energy capacity operational by March-end 2022. The current combined wind and solar power capacity installed in India is less than 30 GW. Thus, a tremendous effort will be required to achieve the stated targets.

The Indian government plans to implement large-scale and small-scale solar and wind energy projects throughout the country through competitive auctions. Some of these auctions have already started. The government will set up projects at unprecedented sizes and will also open up more sectors.

The central government has auctioned several projects under the National Solar Mission. The government plans to add 20 GW of solar power capacity through “ultra mega solar power projects,” with projects having capacities up to 4 GW. These ultra mega solar power projects will be set up across almost all the states.

A number of states have also announced their respective renewable energy capacity addition targets with special emphasis on solar power. Large-scale solar power project auctions have taken place under the national as well as the state solar power policies.

The real heroes of all these auctions have been private sector project developers. Initially, Indian companies were the leading participants in these auctions. However, as the capacity addition targets increased, so did the number and volume of auctions, which, in turn, attracted several international companies. With increased competition, the tariff bids slipped to unprecedented levels. Over the last 5 years, weighted average bids for solar PV power projects have fallen by more than 50% and now compete with the cost of power generation from new coal-based power plants.

This aggressive march towards grid parity has been possible only because of large-scale participation of national and international private sector companies. Some of the companies leading the Indian solar power market include SunEdison, First Solar, and SkyPower Global, among several others. From over 5 years of auctions, it has become clear that, without the aggressive participation of the private sector, the steep rise of India’s renewable energy market would not have been possible.

Private sector companies have also played an important role in expanding India’s wind energy capacity. Suzlon Energy emerged as one of the largest wind turbine manufacturers in the world following its acquisition of Europe-based Repower. India’s conducive wind energy market attracted international companies including Vestas and Gamesa.

Now, these companies are competing to set up India’s first offshore wind energy project. Suzlon Energy has already invested millions to set up a project in western India, while several other companies are expected to participate in the first-ever auction of offshore wind energy projects in India.

The continued participation of private sector companies will be essential for achieving the seemingly impossible capacity addition targets set by the Indian government. Aggressive participation by private companies shall set a strong foundation for the low-carbon growth of India’s economy.

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