India’s ambitions to expand renewables – an interim report

In a nutshell:

After years of stable growth, India has become one of the largest drivers of the global economic growth. Alone in the budget

year 2016/2017, India reported an economic growth rate of 7.1%.

from Michael Wekezer and Sabrina Burkert

Nonetheless, the economic growth, the use of new technologies that comes with it, and a population already of over 1.3 billion, are factors which also increase the need for energy in this third largest democracy in the world. Coal-fired power plants invariably remain the main component of the installed capacity. Electricity generation using fossil fuels is often more expensive because excess consumption in India is subject to higher prices due to the cross-subsidisation system there. For comparison: At INR 2.44/kWh, the electricity price for solar energy has been lower than that for coal power for the first time this year. Another problem is that a nationwide supply of electricity cannot be always ensured. In order to produce more energy and thus offer a broader

energy portfolio and reduce the growing environmental damage that comes from fossil energy sources in the future, India is increasingly

turning to renewable energy sources. In this process, India has undertaken as part of the Paris Climate Agreement to produce 40% of its energy capacity from non-fossil energy sources by 2030.

In the light of the ambitious plans of the Indian government to

expand renewable energy sources, there are first indications for a

transition in energy supply: In the National Electricity Plan released in December 2016, the government announced that the INDC goal (Intended Nationally Determined Contribution) would be exceeded and the non-fossil capacities would even reach about 56.5% in 2026-27. By 2022, 175 GW should be additionally fed into the grid, with the electricity coming from renewable energy power plants (solar power plants: 100GW, wind power: 60 GW, biogas & biomass 15 GW, small-scale hydro power: 5 GW). If this plan were implemented, India would become one of the largest green energy producers in the world and would overtake some industrialised nations in renewables.

But how does India want to achieve this ambitious goal? Given a market share of currently about 17%, renewables do not yet play the role the government desires them to play on the sub-continent. The main approach of the Indian government to changing this situation is to build –with the help of foreign investors – technologically advanced coal-fired power plants or install the so – called supercritical reactors which currently show a higher degree of efficiency (as of now 31%) and emit less carbon dioxide, fumes, and other pollutants into the atmosphere.

Despite long years of a political debate over the construction of large dams, hydro power also shows immense potential, especially when it comes to small-scale hydro power stations. India wants to expand the installed capacity from the current 35 GW to 150 GW by 2030 and enjoys technological and financial support under the German Development Cooperation programme for this purpose. Especially in the Himalayas and in the north-eastern region of the country, India sits on the so far untapped hydro power potential which is very suitable for the

production of electricity from hydro power.

Wind power is located mainly in the southern federal states, Tamil

Nadu and Andhra Pradesh. The expansion of wind power has partly reached its limits because the allocation of land in recent years in this densely populated country has caused entrepreneurs difficulties due to complicated land ownership and leasehold laws. Nonetheless, the Indian government is alternatively scoping out opportunities for offshore wind power plants. The first offshore wind power plant with a capacity of 500 MW is due to be completed by 2019 in the federal state of Gujarat. Further power plants are being planned. Furthermore, India is home to

the Suzlon company, the third largest wind turbine manufacturer in the world, currently building in Gujarat one of the world‘s largest wind farm with a capacity of 1GW.

Solar energy from solar thermal power plants is mainly produced in western federal states of Rajasthan and Gujarat. Photovoltaics (PV) power plants are installed on a nationwide scale. In the area of solar power, further projects are being implemented: The United Nations (UN) works closely with Indian railway companies. The United Nations Development Programme (UNDP) is also to help achieve the ambitious goal of producing 5 GW in solar electricity by 2025 thanks to the

installation of solar panels on trains. This should be implemented

in three stages using rooftop and ground-mounted installations (Phase 1: Gujarat & Rajasthan, Phase 2 & 3: the rest of the federal states). Thus, the solar energy production capacity should increase fivefold compared to the initial goal of 1 GW. In addition, by 2032, India wants to replace diesel and petrol cars with electrical cars to be fuelled using electricity from renewable energy sources.

One of the most important prerequisites for the economic growth of India is to create a positive stimulus for its economy. The negative

impact of using coal on the health of people and the related costs are an important factor which is gaining in importance also in India. It remains to be seen what influence this will have on India’s coal policy in the years ahead. The country’s ambition to expand renewables shows, however, that India has recognised the huge potential of these energy sources and their role in ensuring a sustainable energy supply. The strong desire of India to become a global leader in producing and using renewables often manifests itself in the approach adopted by the Indian

government e.g. during the German-Indian governmental consultations

held in late May in Berlin, where the German federal government warranted India an annual development budget of EUR 1 billion for investments, including those in renewables, and is also reflected in the recent founding of the international Solar Allianz (ISA). Also bi- and multi-lateral initiatives are an important factor contributing to further lowering the renewable energy costs thanks to the development and transfer of technologies and thus to accelerating the transition in energy supply. Nonetheless, the Indian government must yet face up to huge challenges: Till today, it has not been able to sufficiently support the domestic solar module production. In the 2016/17 financial year, about

5.7 GW, or 89%, of solar modules were imported. This dependence

on imports in such a growing and strategically important market sector as the solar power involves the risk of the Indian government making hasty and wrong political decisions as long as they continue to support short-sighted incentive programmes, rather than consider long-term implications for the sector and develop an appropriate domestic production plan.