Published on June 19th, 2018 | by Saurabh0
This Little Tweak Can Help India Achieve 227 Gigawatts Renewable Capacity By 2022
June 19th, 2018 by Saurabh
Clean energy news was abuzz this past week with the news that India had increased its renewable energy capacity target from 175 gigawatts to 227 gigawatts by March 2022. A couple of articles have already been published at CleanTechnica. I also decided to take a shot at it, a rather critical one though.
Some critical points to consider:
First, has India really increased its renewable energy capacity target for March 2022?
Technically and officially, no. The decision to set or change the renewable energy target resides with the Ministry of New & Renewable Energy. But for medium or long-term targets the ministry is expected to take approval from the cabinet of ministers. The ministry usually is free to take decisions on annual capacity addition targets, which it communicates to the government ahead of budget announcements in early February.
The news that India had increased its capacity target from 175 gigawatts to 227 gigawatts did not originate from any official document, press release, or advisory from the government itself. It was a statement that the Ministry for New & Renewable Energy RK Singh made while interacting with media outlets. What he actually said was that given the various schemes currently operational or in the pipeline, the country could over-achieve on its current target and have 227 gigawatts of renewable energy installed by March 2022.
So, India’s target stands firm at 175 gigawatts.
Second, some new schemes have been launched to surpass 175 gigawatt capacity
Broadly, four new schemes have been announced by the ministry that may help the country over-achieve on its 175 gigawatt target. These schemes will target floating solar power projects, offshore wind energy projects, hybrid solar-wind energy projects, and manufacturing-linked solar power projects.
I asked a renewable energy expert in India about the likelihood and extent of success expected from each of these schemes.
“Not all of these four schemes are comparable with the conventional solar and wind energy schemes already operational. Gestation periods and cost of generation for floating solar and offshore wind energy projects is significantly higher than conventional solar and wind energy projects. We have ample examples of the sensitivity of buyers to even slightly higher solar and wind energy tariffs. It is hard to see a substantial number of buyers signing up for costly power when cheaper solar, wind, and even thermal power is available.”
The manufacturing-linked capacity addition scheme, at least on the face of it, would likely be ineffective. Developers will have to set up manufacturing facilities as a prerequisite to setting up solar power projects. They would, however, be free to use their own modules or those imported from other countries. Now, the question is what will the companies do with the modules they manufacture themselves? The market for Indian-made modules is virtually non-existent since imported modules enjoy a share of around 95%.
Third, is even 175 gigawatts achievable?
As of 31 May 2018, India had an installed renewable energy capacity of 70.5 gigawatts. So, around 105 gigawatts capacity is to be added in 46 months to March 2022. This equates to around 2.3 gigawatt capacity addition per month or close to 28 gigawatt capacity addition per year. The largest renewable energy India has ever added in a calendar year is 12.8 gigawatts, and in a financial year 14.4 gigawatts. For the current financial year, India has set a target to add 15.6 gigawatts of renewable energy capacity.
While a well-planned auctions schedule for solar and wind energy capacity has been finalized by MNRE, the schedule has to work like clockwork in order to achieve the capacity target. Hiccups like anti-dumping, import, and safeguard duties will derail and delay this schedule, as we have seen over the last few months.
“Having such ambitious renewable energy targets is commendable, and the government has done well to give a clear auctions calendar. However, the issues of demand and impact of installed capacity should also be considered. Is there sufficient demand for the huge volume of renewable energy capacity set up come up? What will happen to the thermal power capacity already installed and bearing the brunt of increasing renewable energy penetration? A further increase in renewable energy capacity would render thermal power plant useless, aggravating the debt problem being faced by the power and banking sector,” the expert added.
Fourth, a policy tweak to achieve 227 gigawatts!
The Indian government has reportedly been considering a policy tweak to increase its installed renewable energy capacity and extend the benefits enjoyed by renewable energy projects to other power sectors as well.
We have covered extensively that the Indian government may classify large hydro power projects as renewable energy projects. If this decision is implemented today, India’s renewable energy capacity would increase 64%, from 70.5 gigawatts to 116 gigawatts, instantly.
India’s large hydro power capacity has increased around 3.8 gigawatts over the last 3 years. At that rate, the large hydro power capacity in 2022 would be around 50.6 gigawatts. Adding 175 gigawatts of renewable energy capacity, if achieved by 2022, would give India an installed renewable energy capacity of 226 gigawatts.
There are a number of reasons why the government would want to classify hydro power projects as renewable energy projects. A reclassification would provide these projects with additional financial benefits and sources of funding apart from the conventional power sector. Many countries in the world consider all hydro power projects as renewable energy projects. Reclassification may also help the government persuade courts that have stopped development of several large hydro power projects due to their environmental impact.
There is no doubt that India is among the leading countries in terms of progress towards a larger share of renewable energy sources in their energy mix. The goals set by the Indian government may seem ambitious but are also the need of the hour, especially for a country where a large majority of power sources are fossil fuel-based. Yet, significant hurdles remain in India’s path to one of the largest renewable energy producers, and only time will tell if India is able to overcome those challenges.