Clean Energy Revolution: India's Transition Towards Renewable Energy Sources

India has recently announced that it is targeting net zero emissions by 2070. Over the last two decades, energy consumption in India has doubled, and the energy use is expected to grow by at least 25% by 2030. India's energy imports amount to US$90 billion annually which is almost 40% of its primary energy, as per Mr. Bhupinder S. Bhalla, Secretary, MNRE. These facts raise the criticality of using renewable energy sources to reduce the consequence of relying on non-renewable resources.

India's Energy Evolution: A Shift Towards Renewables

As of March 2024, the thermal power generation capacity accounted for 56% of Installed electricity generation capacity in India, while renewable energy sources (RES) and hydroelectric power accounted for 32% and 11%, respectively. The contribution of nuclear power to the total installed capacity was only 2%.

The proportion of thermal-based generation capacity in the overall installed capacity has seen a decrease from 63.3% in 2008-09 to 56% in 2023-24. Simultaneously, the share of hydro-based generation capacity also diminished from 25% to 11%, while the capacity from renewables experienced a significant rise from 8.9% to 32%. From 2009 to 2023, CAGR of the total installed electricity generation capacity was approximately 7.7% in contrast to 17.4% for RES and 5.7% for all other sources.

Source: NEP 14, Annual Energy Statistics 2024, National Power Portal

*Data until March 2024

Energy sector in India is going through profound transformation, where it is progressively shifting away from fossil fuels and welcoming renewable energy sources. In 2022-23, the utility's installed capacity of RES (excluding hydro) grew by 12.20% while that of thermal sources grew by 0.49%. This trend demonstrates that India is changing its energy patterns with renewables accumulating more weight across the nation’s electricity system.

Within renewables, Solar accounts for the biggest share in the pie at 53.4% followed by wind power (being 34.1%), bio-power and waste to energy (adding up to 8.2%), and small hydro projects (being 3.9%).

Net Zero by 2070

Source: Citi Group

Ethanol 20: India aims to achieve a 20% blend of ethanol in petrol by 2025-26. This requires approximately 1,016 crore litres of ethanol to be utilized to replace an equivalent amount of petrol. Considering both blending applications and others, a total demand for ethanol is estimated at 1,350 crore litres to meet the target of blending 20% by 2025. If the operational efficiency of the production is at 80%, then by 2025, the consumption of motor spirit should be around 1.7 billion litres. This estimate takes into consideration the projected increase in petrol demand from two-wheelers and passenger cars as well as the expected sales of motor spirit.          

National Green Hydrogen Mission: This mission was approved in January 2023 with a financial outlay of US$ 2.4 billion. The budget allocation includes US$ 2.1 billion (Rs. 17,490 crore) for the SIGHT programme, US$ 175.9 million (Rs. 1,466 crore) for pilot projects, US$ 48 million (Rs. 400 crore) for research and development, and US$ 46.6 million (Rs. 388 crore) for miscellaneous components.

At US$ 2.1 billion, majority of the budget has been assigned for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, a programme supporting the domestic manufacturing of electrolysers and the production of green hydrogen. The SIGHT programme will operate under Mode-2B, a framework devised by the MNRE that centralises demand and engages in competitive bidding to secure the most cost-effective supply of green hydrogen and its derivatives. The first tranche of Mode-2B aims for a bidding capacity of 200,000 million tonnes annually.

India’s strategy under this mission is to become a competitive exporter of green hydrogen, targeting a share of the anticipated global demand of 200 million tonnes by 2030.

Source: Ministry of New and Renewable Energy

EV Push: The EVs being very popular in these days can be attributed to the fact they are powered by electricity instead of traditional fuels. This transition targets the main environmental issue that blooming of automobiles causes, and that’s their combustion and exhaust. EVs don't require specific components that must be in the ICE vehicles, gas tanks, fuel lines and exhaust pipes. Consequently, the CO2 footprint that is linked with the manufacture of these ICE-aimed parts drops down. In 2023, India noticed an amazing increase in the sales of EVs, amounting to 1.62 million units at overall, which makes a 50% increase from 1.09 million units in 2022. This uptrend reveals a fast-growing trend towards EVs purchase in India which is seen in n increase EV share from 1.75% in 2021 to 6.38% in 2023, which is almost four times the previous level. The trend is a reflection of rising consumer demand that has been slowly shifting in the direction of EVs in one year. The Indian government has established ambitious targets for EV sales penetration by 2030: 30% shared by private cars, 70% shared by commercial ones, and 80% shared by two- and three- wheelers. These goals are not only about decreasing the extent of use of conventional fuels but will make the environment cleaner and the air quality better. Estimates by IEA envision that in Indian EV fleet decarbonization by 2030 can drop approximately 5 Mt proportionally to global efforts against climate change.

NEP 14: The central authority, the Central Electricity Authority (CEA) has announced the National Electricity Plan (NEP) for 2022-32. This plan presents an idea of the prevalent electricity demand, installed capacity, and set targets for renewable energy development. The NEP aims at the achievement of a non-fossil based installed capacity size of up to 500 GW by 2029-30. For that to be achieved, the NEP envisages the share of non-fossil-based capacity to be increased in 2026-27 to 57.4% and potentially 68.4% by 2031-32. Projections aims at significant rise of India’s electricity generation in FY32 from 1,492 TWh of FY22 to the projected 2,666 TWh. The plan highlights the aggressive targets for wind and solar for the coming decade, with levelized solar energy expected to grow by 50% in this year period, from 73 TWh in FY22 to 666 TWh in FY32. The wind power capacity is projected by the NEP14 to expand from 69 TWh to the total of 258 TWh of power during the mentioned period.
 

Other Government Initiatives

Path Forward: Accelerating Towards a Sustainable Future

India is all set for transformative and multi-dimensional growth of clean and renewable energy sources which is being developed supportively by the government initiatives, technological developments, and investments. In the country’s journey to its ambitious target of reaching net neutrality by 2070, the solar and wind capacities, as well as other renewable energy capacities, are forecasted to witness very rapid growth. NEP envisages an immense growth in generation of electricity from renewables by 2032 and solar energy is supposed to contribute to 50% of it. In turn the wind power is going to play a crucial role, having 16% contribution to the elevation. The government's interest in putting up a suitable ecosystem for the development of green hydrogen, ethanol blending, and EV vehicles as well as setting elaborate roadmaps and targets for the sectors' renewable energy penetration also adds to this movement. Policy instruments like PLI scheme for solar PVs with the investment of US$ 2.9 billion (Rs. 24,000 crore) signals India is taking aggressive steps towards a shift to the green economy. This building momentum, therefore, reflects not only India's dedication to fulfilling global climate goals but also the creation of a sustainable and energy-reliable future, which propels the country to become a leading global power in renewable energy.