Renewable energy procurements have strengthened in India with the launch of the target of 500GW (280GW of solar and 140GW of wind) of renewable energy by 2030 – and plans to reduce the emission intensity of its GDP by 45% from 2005 levels by 2030. Of which already ~130GW was achieved as of July 2023, which is just ~26% of the target. As of date, India has installed a maximum utility-scale PV capacity of 16GWs in one year in year 2022 – and we need to increase our annual capacity deployment by 4.5X. Additionally, the generation planning expansion report by CEA estimates reaching 64% of renewables by 2030. Apart from Net Zero Targets (NZT), energy security and revenue growth prospects are the key drivers to accelerate this race towards 1000TWh in India.
Recently, it has been witnessed that India’s power demand has surged by ~8% when compared to last year and recorded its peak power demand at 234 GW on August 17, 2023. With increasing, distributed energy resources in the grid, electrification of industries and electric vehicles are creating complexities in the grid, leading to demand-supply imbalances, acute power cuts or shortages, and stressed grids in many states of India. With this, it has become crucial to revisit the past decade and understand the key imperatives that are necessary for future-proofing India’s energy transition along with stable operations of the transmission and distribution grids.
Looking Back: Roadblocks in Green Race
A decade down the line, sustainability and digitization will be mainstream as there will be a new revenue stream for key stakeholders. India is already making huge progress towards decarbonization, and has taken various measures for renewable purchase obligations, ultra mega projects or solar parks, CPSU scheme, PLI scheme, waiver of transmission system charges for inter-state solar and wind power sales, green energy trading platforms such as Green-Term Ahead Market (G-TAM), etc. However, quality and integration are areas that are still nebulous and there is a need to take learnings from past developments and new ones with strong institutional support and adequate competencies.
- Investments: The energy transition requires substantial investments of $12.7 trillion for India’s transition to a net-zero economy by 2050 presents an investment opportunity. Of these, 30% will be required for EV sales, 16% in grid upgrades, 6% in CCS, 3% in hydrogen, and the rest in other low-carbon initiatives. Investments in energy flexibility pilots are crucial for flexibility management to manage underutilized grids efficiently with increasing renewables assets (utility-scale and behind the meter-BTM). Additionally, investments in CCS and hydrogen would also be important for the industrial sector (steel, aluminium, petrochemical, and cement) decarbonization to tackle hard-to-abate emissions.
- Policies & programs: Central and State Governments need to re-design policy mechanisms and programs that support current issues such as the market mechanism for prosumers, demand-side flexibility programs, and policy, upscaling of energy storage (BTM) for peak load management and balancing price signals, RE curtailment issues, and other schemes. Furthermore, there are a handful of policies released by govt, the National Electricity Plan 2023, the National Green Hydrogen Mission 2023, the Carbon Credit Trading Scheme, and the draft Green Credit Programme, in recent months that need appropriate execution.
- Capacity of DISCOMs to absorb RE: Many DISCOMs hold on from signing contracts because of the expectation of tariffs falling even further. Tariffs are already hovering between INR 2.2 to INR 2.7. Lower tariffs affect investor returns and make projects unviable. Furthermore, to manage RE intermittency and limited availability, discoms must invest in battery storage, energy efficiency, and demand-side management programs. But these require investments, piloting, and capacity which the DISCOMs lack because of their financial situation.
- Under development of new and frontier technologies: Technologies like floating solar, offshore wind, and distributed renewables are still emerging in the Indian market, and due to land constraints, these technologies need to be on a fast track to meet RE targets.
- Floating PV solar had a target of 10 GW by 2022, of which ~2GW were installed. With a potential of more than 100 GW, only ~4 GW tenders are out, and some got canceled due to limited float/pontoon suppliers or undeveloped markets.
Similarly, the offshore wind policy was launched in 2016 by MNRE & NIWE, and a potential of 100 GW in coastal areas was evaluated 5 years ago. NIWE has released guidelines and facilitation schemes, and an EOI of 1 GW was released. Since the industry faces supply-chain barriers, and policy and offtake uncertainties, no installations have happened so far but revived the plan in 2023 where bids will be issued for the first 3 years of 4GW annually.
Forward Approach: Turn Challenges into Opportunities
Past experiences necessitate India reinventing itself around Renewable Energy and Digital transformation for energy sector transformation by taking certain strategic moves. The need is to balance the new complexity in India’s energy systems, and turn these challenges into opportunities brought about by below key levers:
- Digitization: Digital twin combined with AI/IoT for demand/supply, price forecast, predictive analytics, AR/VR for optimizing operations, productivity, and intelligent automation will help manage demand-supply balances. Data management and asset health diagnostic of renewable assets will become more dispatchable and transparent with digitization. With growing installation, efficient integration, and performance monitoring become essential. AI/IoT-enabled systems play a vital role in big data analytics, forecasting/prediction, and monitoring of data gathered from these operational plants; fault and defect diagnostics of the operational plant would be another vertical to minimize plant downtime. Enable transparency between OEMs, IPPs, and grids/DISOMs.
- Demand aggregation: Aggregation of demand from various consumers (CI, residential, remote areas, and areas at higher altitudes) will help in managing various grid applications such as voltage/ frequency regulation, ancillary services, arbitrage, and flexibility/congestion management. Innovative aggregated DERs model will ease transparent and flexible trade-offs of electricity for consumers and DISCOMs. The retail market transformation will be carried out by new players such as aggregators and third party storage providers. These resources are primarily used for self-consumption for consumers and demand-side management to grid operators and will accelerate the pace of revolution.
- Platform & services: Explore end-to-end energy value chain and associated process to develop collaborative platform services for seamless one-stop-shop solutions for energy flexibility, sustainability as service, green data centers, EV charging services roaming platform, etc. The proposition is to bring all stakeholders to one platform to improve transparency and efficiency for renewable energy, integrated platforms for grid/discoms, and aggregation platforms for DISCOMs/retailers/market operators.
- Decentralize: Reduce the industry’s dependence on the grid and transmission network and save on costs of procuring high-cost energy fuels and power from the grid. Peer-to-peer trading through blockchain (which happens at the local distribution level) can reduce peak demand grid congestion. This transformative technology facilitates optimized utilization of renewable resources, empowers localized and distributed energy markets, and nurtures community-driven renewable energy DERs with storage systems that can dispatch excess electricity produced to the grid which can, in turn, help defer additional expenditure on increasing generation capacity and transmission infrastructure to meet peak demand.
- Diversify: Identify the most appropriate mix/hybrid of various RE technologies for electric and non-electric applications or use cases. More focus needs to be on Technology such as BESS, Green hydrogen, and CCUS will act as a catalyst in this transition that will play a dominant role in flexible energy dispatch.
Battery energy storage/Green hydrogen system will complement intermittent power supply. Embracing these technological improvements with grid integration not only unlocks new prospects but also enables cost reduction and cultivates a cleaner, more resilient, and orchestrated energy ecosystem in India.
Payal Saxena is a Management Consulting Analyst at a US-based IT consulting firm. She has 7.5+ years of experience in Renewable Energy, Energy Transition, and Utilities. She has worked extensively with Global stakeholders (utilities, IPPs, Investors, and Industries) on developing renewable strategies and roadmaps, policy advocacy initiatives, techno-economic analysis, and business models to facilitate a low carbon economy, systemic efficiency, and net zero transition.