India’s Clean Power Revolution’ is a report produced by BloombergNEF and Bloomberg Philanthropies. The report focuses on how India is moving towards a clean energy market, and how it is set to reach the renewable power target of 450GW by the year 2030. The report reads: ‘There’s no doubt about it: the clean energy revolution is here, and local, state, and national governments are at the forefront. At Bloomberg Philanthropies, we believe that these forward-thinking local leaders can share lessons and strategies as they work to create strong, sustainable economies and usher us into the clean energy future. In partnership with BloombergNEF, Bloomberg Philanthropies has released India’s Clean Power Revolution, outlining the current successes and future potential of India’s clean energy economy. India’s commitment to renewable energy has made it the number one emerging market for clean energy investment, according to BNEF’s Climatescope. The country has set ambitious renewable energy goals – 175 GW by 2022 and 450 GW by 2030 – and is making strong progress towards meeting those targets, thanks to supportive government policies, openness to investors, and the volume of renewables auctioned in recent years.’
The report further highlighted how as a nation that seeks to recover and restore economies in the wake of the COVID-19 pandemic, India’s competitive clean energy auction market and clean energy progress can offer lessons learned for economies seeking to achieve a green recovery maximizing economic, health, and environmental benefits.
Ambitious targets, comprehensive government policies and economics have placed India amongst the most vibrant clean energy markets in the world. As the energy transition accelerates, this decade brings new challenges and opportunities for all the actors in India’s clean power revolution.
- Targets: In 2015, India announced a target of building 175GW of clean energy by 2022, a more-than-fourfold increase in installed capacity in just seven years. By 2030, Prime Minister Narendra Modi wants India to reach a new goal of 450GW of renewables.
- Integrating such volumes of variable generation will require a flexible power system. Apart from battery storage and peaker gas plants, lessons from around the world highlight the importance of demand-side measures, grid investments and market reforms for India.
- India is the world’s largest and most competitive clean energy auction market, allowing it to procure some of the cheapest renewable power. New auction designs allow the replacement of fossil fuels through better integration.
- The 2030 target brings momentum to the goal of capturing more value from the transition domestically, spelled out in the ‘Make in India’ strategy. The wind sector has already seen leading equipment manufacturers open factories to supply the national and international markets.
- Executive summary (1/2) Renewables need to keep growing to meet national targets 53% Drop in annual weighted average auction tariffs for utility-scale solar, over five years 1 India ranked as the most attractive emerging market for clean energy investment in Climatescope 2019 80% Expected growth in India’s power demand from now till 2030 39 50 62 75 86 175 450 0 100 200 300 400 500 2015 2016 2017 2018 2019 2022 2030 GW Solar Wind Small hydro Biomass Renewables
- The transformation of India’s power sector in this decade brings a $633 billion investment opportunity. Capital is needed to build more power plants, and also to replace and expand grid infrastructure. Public and private finance will need to mobilize to deliver these investments.
- Accelerating deployment calls for better coordination on land issues to ensure that grid availability matches the commissioning of new power projects. Simplifying land acquisition procedures and digitizing land records would remove a bottleneck affecting the sector today.
- The financial health and resiliency of power distribution companies will also need to be improved to give investors confidence that they will not face payment delays and retroactive contract negotiation. Procurement of clean energy by corporates looking to reduce their costs provides an opportunity to offer alternative bankable off-takers for clean energy project developers.
- The continuation of India’s clean power revolution is critical to global climate efforts. Coal’s role in the mix will continue to drop despite rising power demand. Retiring older coal plants will improve utilization rates for the coal fleet and significantly reduce CO2 emissions. New clean power generation will help India avoid more than 499 million tons of CO2 emissions a year by 2030 and bring peak emissions within reach in the next decade.
- In the last decade, India’s net power generation capacity increased by 212GW – nearly the total grid size of France. Roughly 42% of this addition came from renewable energy sources including large hydro.
- India’s wind and solar installed capacity quadrupled in a decade, to reach 82GW by 2019. The two main reasons for the sharp jump in capacity have been falling technology costs and proactive government policies to achieve the target of 175GW renewables by 2022.
- Additions of renewables have risen from 2015 levels. From 2017, 15GW of renewables have been added each year. More than two-thirds of this came from PV, followed by wind. Installations of hydro power have remained low because of long construction timelines, environmental concerns and social pushback.
- At the end of 2019, the country had 143GW of clean generating capacity (including large hydro) – representing about 38% of all the power installed in the country.
- India’s power demand in 2030 will be around 2,700TWh, up from 1,500TWh in 2020
- Increasing population and GDP per capita will continue to drive power demand growth in the next decade. Newly connected rural consumers will also expand their use of electrical appliances. Rising demand for air conditioning will push up its power usage by 25% by 2030.
- The share of demand from electric vehicles is less than 0.5% by 2030 despite early signs of growth by 2030.
India’s power demand is expected to grow by 80% in ten years
Covid-19: slowing power demand growth, but not the energy transition
- Despite the rise in power demand, per-capita electricity consumption in India will continue to remain below that of many developed and developing economies. Even by 2030, India’s per-capita demand is lower than Brazil’s today.
- This suggests that there is room for power demand to grow well beyond 2030, as India catches up with global trends in per-capita electricity requirements.
- Government’s vision is more bullish than our least-cost system modeling results
- The report estimates that the size of the Indian grid will expand to 838GW by FY2029-2030, compared to NEO 2019’s projection of a rise to 734GW by 2030.
- NEO 2019 predicts installed capacity of 204GW(AC) of solar, 109GW of wind (onshore and offshore) and 234GW of coal by 2030. By 2030, 62% of installed capacity would be non-fossil fuel based. This is significantly higher than the 40% India committed to under the Paris Agreement
- CEA projects 2,518TWh of gross electricity generation by FY2029-30, compared to a 9% higher figure of 2,747TWh for 2030 in NEO 2019. The plant capacity factors are higher in NEO 2019, leading to more generation from lower capacity compared to CEA projections.
- CEA expects India to source 54% of electricity from coal, 19% from solar and 12% from wind by 2029-2030. NEO 2019 projects that coal would supply 55%, and solar and wind just 15% and 11% respectively by 2030.
- Covid-19: slowing power demand growth, but not the energy transition
- India’s power demand fell by 36% in the first week of the Covid-19 national lockdown as commercial and industrial users shut operations. Demand started to pick up after the economy began to gradually re-open.
- The share of renewables in the generation mix before India’s virus lockdown was 14-18%. After March 25, the drop in power demand led to lower utilization of coal plants. Wind and solar generators were protected by their priority dispatch. This led to the share of renewables going up to nearly 30%. The pandemic has given grid operators and discoms the experience of operating the power system with higher shares of intermittent generation. This should help them plan the flexibility requirements and dispatch procedures for a 450GW renewables future.
Please Note: The above write-up is a report by BloombergNEF and Bloomberg Philanthropies