Renewable Energy Initiatives: India's Commitment to Clean and Affordable Power

India’s is witnessing a significant increase in its energy consumption, evident by 2x growth in its energy consumption over the last two decades. Further, the energy consumption in India is expected to grow by another 25% by 2030, as per a report from Ministry of New and renewable energy. The report further states that major sectors in India are still dependant on imported fossil fuels. To attain net zero carbon emissions by 2070, the government has taken necessary steps and recognized the negative impact of fossil fuels on the environment. To achieve this goal government is taking several steps to accelerate the adoption of renewable energy sources. In this blog, we discuss and evaluate the key initiatives being taken by the Indian government.

Renewable energy – Key sources

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. Nuclear power accounted for just 2% of the total installed capacity. Key renewable energy sources are mentioned below:

India’s short-term and long-term targets to become an environmentally sustainable nation

• To reach a non-fossil fuel energy capacity of 500 GW
• Reduce carbon dioxide (CO2) emissions by 1 billion tonnes
• Reduction in carbon intensity to below 45%

India’s long-term target is to achieve net-zero carbon emissions by 2070.

Hydropower

Hydropower is the world's leading source of renewable energy. To tap in, Hydropower Development Policy was formulated in 1998, to undertake measures and use the hydroelectric power potential for the country.

Majority of the potential for hydropower is tapped in the Northeastern and Himalayan regions. The region is one of the six most seismically active regions globally, which helps in hydropower generation at a huge scale. The government of India has commissioned nine hydroelectric projects with a total capacity of 2,412 MW in the Northeastern region since 2014-15.

Hydropower generation has evolved significantly, by using water flow to produce electricity. Initially, it was dependent on simple water wheels; however, currently modern techniques are used, which includes sophisticated dams and turbines, enhancing efficiency and increasing capacity.

Source: Press information bureau

The above graph illustrates growth in hydropower generation in India, which doubled from 73,579 GWh in 2002 to 130,511 GWh in 2012. This upward trend continues to 151,627 GWh in 2022, and further increasing to 162,098 GWh in 2023.

Wind energy expansion

India stands as the fourth-largest nation in the global wind power market. India has an advantage of 7,600 km (mainland) surrounded by water on three sides, thereby boosting the offshore wind energy generation. The significant potential within the identified zones has been estimated to be 70 GW off the coast of Gujarat and Tamil Nadu.

Innovations have been made in wind turbine technology and manufacturing

Solar power revolution

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%). There has been an increase for solar power adoption in the country. Key stats of solar power evolution in India are:

• India ranks fifth in terms of solar power capacity in comparison with other countries
• India's solar capacity rose from 1.60 GW in 2013 to 63.15 GW in 2022
• By 2023, government sanctioned 51 solar parks with a total capacity of 37.74 GW

Biomass energy

Government is taking several initiatives that are implemented for bioenergy. Through anaerobic digestion, agricultural residues, forestry by-products and organic waste, are used to produce biogas. This helps to effectively use abundant biomass resources, effectively reducing carbon emissions.

The government has launched several projects. In 2022-23, 105 MWeq capacity of bioenergy projects were installed. Additionally, 12,693 small biogas plants and 1.107 medium size biogas plants were installed.

In 2023-24 Union Budget, a mandatory requirement was issued by government to utilise a minimum of 5% compressed biogas (CBG) in their fuel mix.

Government initiatives

Production Linked Incentive (PLI) Scheme

The scheme’s main goal is to boost domestic module manufacturing and decrease dependence on imports. With a huge outlay of US$ 2.9 billion (Rs. 24,000 crore), the scheme aims to achieve GW-sc­a­le manufacturing capability in high-efficiency solar photovoltaic (PV) modules.

A total capacity of 8,737 MW has been added under PLI (Tranche I). The government has approved a significant expansion in domestic solar PV module manufacturing, allocating 39,600 MW across 11 companies under the PLI Scheme for High Efficiency Solar PV Modules (Tranche II). This initiative, with an investment of US$ 1,686.2 million (Rs. 14,007 crore), will be implemented in three phases: 7,400 MW by October 2024, 16,800 MW by April 2025, and the remaining 15,400 MW by April 2026. This initiative is expected to attract an investment of US$ 11.2 billion (Rs. 93,041 crore) and create over 101,487 jobs, including 35,010 direct and 66,477 indirect roles, significantly boosting the sector and advancing India’s sustainable energy future.

Reduced solar power tariffs and improved affordability for consumers

Government initiative ‘National Solar Mission’ has significantly contributed to reduce solar power tariffs, which helps consumers to buy. The aim is to create dedicated infrastructure to which will help is conquering the challenges associated with generation of renewable energy.

Subsidy for solar panels installation

Up to 2kW: US$ 359.4 (Rs. 30,000/Kw)

3Kw: US$ 359.4 (Rs. 78,000)

Over 3Kw: US$ 359.4 (Rs. 78,000 fixed)

Solar parks

Launched in December 2014, the Scheme for the Development of Solar Parks and Ultra Mega Solar Power Projects initially targeted a total capacity of 20,000 MW.

This target was subsequently increased to 40,000 MW. The Ministry of Renewable Energy has approved 50 solar parks with a combined capacity of approximately 37,490 MW across 12 states nationwide, till 2022.

Green Energy Corridor

• This project focuses on developing and integrating renewable energy sources, particularly wind and solar, into the existing electricity grid infrastructure.
• GEC phase 1 is already under implementation in many states of India. The total project cost for the phase is estimated to be US$ 1.21 billion (Rs. 10,141 crore), with funding mechanism of 40% from central financial assistance, 40% loan from Kreditanstalt für Wiederaufbau (KfW), Germany and the remaining 20% from State Transmission Utilities (STU).
• GEC phase 2 was approved in October 2023, with a target to be setup by FY30, with total estimated cost of US$ 2.5 billion (Rs. 20,773 crore) and central financial assistance of 40% of the project cost.

Increase in allocation of budgetary spending for green India

One of the National Action Plan on Climate Change’s (NAPCC) eight missions is the National Mission for Green India (GIM). This mission is a comprehensive effort to enhance sustainable development and environmental conservation in India.

Source: Press information bureau

The government has taken active measures on energy conversion by raising the budget for green and clean energy, from US$ 22 million in FY21 to US$ 34 million in FY22, and further increased to US$ 43 million in FY23.

In June 2024, the Government of India approved a funding of US$ 5.6 million (Rs. 50 crore) for each of the four upcoming green hydrogen valley projects in the country. This financial support aims to promote the development and adoption of clean energy technologies in India.

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 schemes

• Pradhanmantri Suryodaya Yojana, started in 2022, aimed at installing rooftop solar systems in one crore houses of India.
• Foreign Direct Investment (FDI) is allowed up to 100% under the automatic route.
• FDI inflow for non-conventional energy stood at US$ 17.8 billion between April 2000-March 2024

Challenges to be conquered

Road ahead for 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. 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. 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. In the country’s journey to its ambitious target of reaching net neutrality by 2070, a financial investment of US$ 2-2.5 trillion (Rs. 150- 208 lakh crore) per year is estimated. It is a big challenge, but we believe that the promising energy sector in India will attract significant international financial inflow to drive the investments. This building momentum, therefore, reflects India's commitment to clean and affordable power in the future.