India’s Green Energy Policy: Ambitions, Setbacks and Triumphs

The government has set a target of achieving 450 GW of RE capacity by 2030, which is a significant increase from the current installed capacity of 93 GW.

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A solar park in India

India has already achieved 68% of its target of attaining renewable energy capacity. It had set a target of installing a capacity of 175 GW by 2022. However, it has so far installed 119 GW capacity.

The target has been missed owing to the shortfall in achieving sub-targets in different categories like - 62% of the solar power objective, 70% of the wind power target, 107% of the bio-power target, and 98% of the small hydropower sector target had been accomplished.

India, with a population of 1.4 billion people in 2023, is likely to surpass China to become the most populous country in the world. So, India’s energy needs are next only to USA and China. That’s why it has set ambitious targets to increase the share of renewable energy (RE) in its energy mix – up to 50% of total energy capacity by 2030.

Prime Minister Mr. Narendra Modi unveiled India's "Panchamrit" policy to mitigate the consequences of climate change during the COP26 climate summit in Glasgow in November 2021. He had set these targets:

  • By 2030, India will have 500 GW of non-fossil energy capacity.
  • By 2030, India will source half of its energy needs from renewable sources.

Other components include:

  • From now until 2030, India will cut its anticipated carbon emissions by a total of one billion tonnes.
  • India will cut its economy's carbon intensity by less than 45% by 2030.
  • India will reach its goal of being Net Negative by 2070.

India's RE plans include a range of initiatives and policies aimed at promoting the deployment of RE technologies such as solar, wind, hydropower, and bio-energy. The government has set a target of achieving 450 GW of RE capacity by 2030, which is a significant increase from the current installed capacity of 93 GW.

Targets Half Met

Objective  -------      Target ----    Achieved 

Solar Power   -----  100 GW ---   62 GW

Wind Power  ------   60 GW ---     42 GW 

Bio-Power ------       10 GW ----    10.7 GW 

Small Hydropower -- 5 GW ----   4.9 GW.

Union Finance Minister Nirmala Sitharaman granted Rs 10,222 crore to the RE industry in the Union Budget 2023 on February 1. The expenditure is a 48 per cent rise over last year's allocation of Rs 6,900.68 crore (budget estimate) and a 45.3% increase over the revised estimate (RE) of Rs 7,033 crore.

In a recent statement, Minister of New and Renewable Energy R. K. Singh stated that, despite its omission from the initial target, large hydro projects were included in the computation of installed RE capacity, and informed Parliament that 165.94 GW, or 95% of the 175 GW renewable target, had been met. Furthermore, "76.13 GW is at various phases of execution, and 36.44 GW is in several stages of bidding," the minister said to the Parliament.

Solar Energy

India ranks 20th in the world for oil production, so the country has been looking to alternative energy sources to power its expanding population. Despite about 20% of India’s population lacking direct access to electricity, the country still consumes more energy per day—about 3790 gigawatt-hours than the entire country of Nicaragua does in a year. With some of the most consistently sunny weather in the world, moving towards solar energy seems like a natural progression to support India’s expanding population.

Several solar parks, which are substantial solar energy projects that offer land and infrastructure for the construction of solar farms, have been built by the government around the nation. Typically, solar parks are built in places with plenty of solar radiation and grid connectivity. To entice private sector participation in solar parks, the government offers financial incentives such as viability gap funding (VGF) and land distribution.

Solar Park

Take Bhadla solar park for example, situated in the Thar Desert, a sizable chunk of the desert, including the Badler region, located 70km northwest of Palodi, has been deemed uninhabitable. The Bhadla Solar Park has demonstrated that even arid regions like India's Thar Desert have a valuable resource called solar radiation. The largest solar park in the world spans more than 56 sq/km or approximately 14,000 acres.

The world's largest solar park, however, was not built overnight; rather, it went through four stages of investment and development that was based on the auctioning of the capacity to different energy businesses worldwide. NTPC Limited, an electricity generation company owned primarily by the Indian government, divided the initial 420 megawatts of Badler's current 2245 megawatt capacity into six packages of 70 megawatts. These packages were then auctioned off to domestic and international energy companies, with Fortune, a company majority-owned by the Finnish government, offering the lowest bid of 4.34 rupees per kilowatt hour (KWH) for one of the packages at the time.

It was the lowest rate the world has ever seen, it equates to about 5.4 cents per KWH. Compare that to Germany's current power rate, 39 cents per KWH to the consumer,  the costliest in the world. Other national and international companies too were forced to lower their power prices, to keep their bids just a few rupees higher than Fortune.

The second phase of the Bhadla project, which was developed by the Solar Energy Corporation of India, a government-owned energy company in India that is exclusively focused on solar power, attracted much more interest due to its success in the first phase, with 27 different companies bidding for 250 additional megawatts of capacity. Phase two added another 87.5 megawatts, which were distributed among auction winners Charisma Energy, Rising Sun Energy, and Sunset group. It covered 346 acres and cost about 451 crore rupees.

Phase 3 was much greater and added 1,000 megawatts, which were sold in two 500-megawatt auctions. At this point, prices had tumbled even lower. The winners of the auctions included Hero Futures Energy, the renowned Japanese company, Softbank Group, and Acme Solar, which bid just 2.44 rupees per kilowatt hour for 200 megawatts, making it the cheapest electricity tariff in India and possibly the cheapest in the entire world.

Phase four saw the deployment of the remaining 2245 megawatts in the park, making it the biggest solar park in the world in December 2018. Winners of this phase were the South African enterprise Fenton Energy Group, along with Avada Power, Airtel, Foxconn, and Softbank Group once again.

Bhadla is also surprisingly economical. For comparison, the Hoover dam in Nevada, USA, has a little lesser capacity for power generation at 2018 megawatts but costs approximately three times as much to build at 3.6 billion dollars in today's money. The entire investment in the Bhadla mega project is expected to be roughly 1.3 billion dollars. The solar park is relatively more affordable and efficient than other sources of energy.

For instance, the average cost of coal-fired electricity in India is 3.20 rupees per kilowatt hour, which is roughly 33% more than the cost of Bhadla's solar energy. In reality, Bhadla contributes to the fact that India has the lowest solar energy costs globally.

In contrast, the development cost of major solar parks in the US is around 1.50 dollars per watt. Megaprojects like Bhadla, which cost just about 79 cents per watt, are almost half the price. India is taking solar energy seriously as a consequence, abandoning prior plans for more expensive coal-fired power facilities.

The government expects 40% of its electricity to come from renewable sources by 2032, with the majority of that coming from solar energy produced at Bhadla and more than 30 other parks like it around the country.

Missed Deadlines

Since 2018, India's capacity for renewable energy has expanded by around 66% (major hydropower excluded). In reality, according to a November 2022 analysis from IndiaSpend, its installed capacity for non-fossil fuels has been increasing more quickly than that for fossil fuels for at least five years. Yet, India has fallen short of its target of reaching a capacity of 175 gigawatts for renewable energy by 2022.

According to the most recent data from the Central Electricity Authority (CEA), India is 32% short of its installed renewable energy target for 2022. Prime Minister Narendra Modi set a target in 2015 of 175 gigawatts of renewable energy capacity to be established in the country by the year 2022. Solar power contributed 100 GW, wind power contributed 60 GW, bio-power contributed 10 GW, and small hydropower contributed 5 GW.

The Council for Energy, Environment, and Water (CEEW), a New Delhi-based think group, highlights the challenges that India confronts in attaining its RE targets, such as insufficient financing for renewable energy, grid balancing issues, and land acquisition for RE projects.

Several of these challenges continue even now, such as renewable energy integration with the electricity grid, purchasers' limited capacity to acquire RE, and raising the necessary money for RE projects, particularly in developing countries like India.

Aside from these, there are a few more reasons why India is falling short of its renewable energy ambitions. "External causes such as COVID-induced supply chain interruptions might account for some of this. Another problem is a lack of coordination between national objectives and state-level enforcement," according to a fellow at the Centre for Policy Research (CPR), a research organization located in New Delhi.

Addition of Large Hydropower in Renewable Energy Goal

The early RE objective excluded big hydropower plants (projects with a capacity of more than 25 megawatts). Nevertheless, in 2019, India modified its definition of renewable energy, including large hydro. A Rajya Sabha statement from the government earlier in 2022 omitted large hydropower from gauging progress towards the 2022 objective. The idea was that hydropower, as opposed to intermittent renewable sources like wind and solar, may help stabilise the electrical grid. Major hydropower projects are largely located in the Himalayas and the North-East Region and would help the region's socioeconomic growth by giving direct jobs in the power sector, according to the government.

In a Lok Sabha reply in March 2021, R. K. Singh, Minister of New and Renewable Energy, stated that one of the government's steps to transition to clean energy was to categorise hydroelectric dams as renewable energy sources.

Specialists, on the other hand, believe that large hydro projects frequently have negative environmental consequences. According to an expert from the Centre for Science and Environment (CSE), a New Delhi-based environmental think tank, large hydro plants or mega-dams divert and diminish natural flows, limiting access for animal and human populations that rely on rivers. Small hydroelectric facilities (with installed capacities of less than 25 megawatts) often cause less ecological consequences since they divert a relatively modest amount of water.

Mega-dams also cause ‘reservoir emissions,' which occur when plant material that existed before flooding begins to degrade while the water remains in the reservoir, releasing methane into the atmosphere as it decays. Methane is a greenhouse gas that, after carbon dioxide (CO2), is the second most significant contributor to global warming, with a warming potential that is 28-34 times more than CO2 over 100 years.

The Challenges

Several initiatives have aided India in becoming one of the world's major solar energy markets. Nonetheless, there are still obstacles to overcome to meet the country's solar energy objectives. One of the most significant obstacles is the lack of finance for solar energy projects, mainly small-scale installations. More assistance from the government and financial institutions is required for the development of small-scale solar installations.

There's a lack of suitable grid infrastructure to facilitate solar energy integration into the system. The intermittent nature of solar energy sources can pose problems for grid stability, especially in places with inadequate grid infrastructure. To facilitate the smooth integration of solar energy into the grid, the government must invest in grid infrastructure. Although the cost of renewable energy has decreased significantly in recent years, financing remains a challenge for many projects.

Unwavering Focus

India's focus on RE is not just an environmental imperative but also an economic opportunity. The country has abundant resources, including solar, wind, biomass, and hydropower. The shift towards RE energy has the potential to create new jobs, improve energy security, and reduce the country's reliance on imported fuels.

India has made significant progress in achieving its renewable energy goals. The country has become a global leader in the production of solar panels and has attracted significant investments in the RE sector. The government's commitment to RE is reflected in its policies and initiatives, such as the National Solar Mission and the National Wind Mission. While there are challenges ahead, India's renewable energy sector is poised to take off, and its policies provide a roadmap for other countries to follow. The Processor