Published on June 12th, 2018 | by Joshua S Hill0
India’s New 227 Gigawatt Renewable Energy Target Is Ambitious, Challenging, But Possible, Says IEEFA
June 12th, 2018 by Joshua S Hill
The announcement earlier this month from India’s power and renewable energy minister RK Singh that his country will increase its interim renewable energy target from 175 gigawatts (GW) by 2022 up to 227 GW has been heavily lauded, and though it “does look excessively ambitious,” according to Tim Buckley from the Institute for Energy Economics and Financial Analysis, he nevertheless believes it is possible.
India’s power and renewable energy minister RK Singh announced last week that his government believes it will overachieve on its existing interim renewable energy of having 175 GW worth of renewable energy by 2022. As such, the minister announced that India was increasing its 2022 target by 52 GW up to 227 GW, which he said would require an additional $50 billion worth of investments over the next few years.
Already the world’s fifth-largest country in terms of installed renewable energy capacity with 70 GW, and another 40 GW under tendering or construction, India has been one of the leading locations for solar development in the world. As a country designated as “emerging,” India’s economy is growing at a rate which requires significant energy capacity additions, but to remain in line with the Paris Climate Agreement, the country needs to cut down on its reliance upon fossil fuel sources like coal.
The big question, therefore, is not whether India has the ambition — India has repeatedly shown it has the ambition for huge renewable energy goals — but whether India has the means by which to pull off such a mammoth task, considering how far they have to go in under five years.
To answer this question I spoke to Tim Buckley, the Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA) in Sydney, Australia. The IEEFA have been closely monitoring India’s energy sector for years, now, and are regarded as some of the world’s leading experts on the sector and its future. As a whole, “IEEFA remains very confident in the impressively growing renewable energy installation trends evident across India, with the Ministry of New and Renewable Energy (MNRE) to-date delivering on its ambitious tendering targets that could see 30-40 GW of annual renewable energy tenders finalised in 2018 and 2019 in order to build a pipeline of projects to put India on track for its long-term vision of 275 GW of renewable energy by 2027 as articulated in the National Electricity Plan 2018 (NEP 2018).”
However, the goal-posts under which these projects were awarded have now been extended. Can India deliver on its new target with the work it has already done?
“The suggestion that India will lift its interim renewable energy target for 2022 from 175 GW to 228 GW does look excessively ambitious relative to the installation activity of 16 GW annually in the last two fiscal years,” Tim Buckley explained to me. “But the level of ambition in India to deliver improved energy security, to wean itself off excessive and costly fossil fuel imports and to drive less polluting, more sustainable economic growth over the long term are clear and ambitious goals of the Modi government.”
According to Buckley, one of the biggest issues for India is going to be integrating so much new variable renewable energy into the country’s electricity grid.
“Grid integration is going to be serious challenge for India to achieve its variable renewable targets, no doubt,” Buckley explained. “Grid investment has been significantly accelerated, but even more will be needed to accommodate greater interstate transmission requirements. But India is currently moving domestic coal up to 1,500 km by rail to coal plants in Southern India – and rail capacity constraints are real and growing. Any suggestion that new non-mine mouth coal is cost competitive and sustainable is ridiculous, particularly given it takes over a decade to open up new interstate rail capacity.”
Coal has already taken a hit from India’s renewable energy drive, with net new thermal power added in the last two years averaging only 6 GW annually, according to IEEFA, down two-thirds on the previous four years.
“If India were to more than double renewable energy installations to over 30 GW annually, India would have no need for any new thermal power capacity other than possibly some replacement capacity for the 48 GW of thermal power capacity coming to the end of its useful life by 2027,” Buckley explained. “With the average coal fired power plant’s utilisation rate averaging just 57% in 2017/18 across India, there is already excess thermal capacity in the system. With new low cost renewables, it is hard to see almost any financial institutions willing to fund new non-mine mouth coal fired capacity in India.”
Another important point worth making is the role that this new renewable energy target can play in achieving other goals and needs in India’s future. Beyond decreasing the country’s reliance on coal, the country is in need of new jobs, economic development and growth, and India is growing — India is expected to overtake China in terms of population by the middle of the next decade — and with that comes a natural growth of the country’s energy capacity, which the IEEFA expects to grow to 619 GW by 2027. While renewable energy will account for 44% of installed capacity (though less in terms of share of production), it will help to push thermal power generation down from 67% in 2017 to 43% in 2027.
“India’s electricity system requires production to grow 5-6% annually for at least the next decade, so this level of total capacity growth is entirely justified and needed. If international capital providers like SoftBank, Macquarie Group, Sembcorp and ENGIE and domestic power majors like Tata, Adani, Greenko, Renew Power, NTPC and Power Grid Corp are willing to provide the magnitude of investment required, India has the clear need for clean energy, and the world has a critical requirement for India to show an energy system transformation can be done successfully if the Paris Climate Agreement is to be achieved. Affordable clean energy will also underpin Prime Minister Narendra Modi’s Make in India strategy.”
India has also set its renewable energy tariffs at 10% to 20% below the cost of existing domestic Indian thermal power generation which, according to Buckley, is “a key factor” making the new renewable energy target “entirely economically rational … One only has to see the latest 500MW wind tariff result for Gujarat in June 2018. A result of Rs2.43-2.45/kWh[i] (US$36/MWh), equal to the record low tariff set in 2017. A fixed flat with no inflation indexation for 25 years. Brilliant and deflationary.”
With the necessary political ambition and economics, what else needs to happen for India to achieve such a mammoth renewable energy target?
“227 GW of RE by 2022 would be a truly herculean task, and probably should be only considered an aspirational direction on the path to the NEP 2027 plan,” Buckley told me.
“Beyond massive interstate grid upgrades, international export markets for Indian generated electricity would need to be created in Bangladesh, Nepal, Bhutan and Myanmar, and a significant step up in pumped hydro storage capacity would also be a must, given the lack of competitively priced domestic gas for peaking capacity.
“But India is transforming its grid, and the level of historic inefficiencies have seen industry build 51GW of captive thermal power capacity, and I’ve seen reports there are upwards of 70GW of backup diesel generators, so far better India invests in the on-grid lower cost alternatives of variable renewables supported by properly costed on-grid peaking generation alternatives.”
Follow CleanTechnica on Google News.
It will make you happy & help you live in peace for the rest of your life.