India on track to achieve the targets set under the Paris Agreement on Clean Energy

During the last session of Parliament, the Minister of State (Independent Charge) for Power, New & Renewable Energy Shri R.K. Singh stated that the Government of India has set a target for installing 175 GW of Renewable and clean Energy capacity (excluding large hydro) by the end of 2021-22 which includes 100 GW from solar, 60 GW from wind, 10 GW from Biomass and 5 GW from Small Hydro.

In order to become self-reliant in power generation and achieving energy transition towards clean energy, Government has inter-alia taken following measures:

(1) The renewable energy capacity to go up to 450 GW.

(2) Phase-wise retirement of old polluting coal based power plants.

(3) Setting up of Ultra Mega Renewable Energy Parks to provide land and transmission to RE developers on a plug and play basis.

(4) Schemes such as Pradhan Mantri Kisan Urja Surakshaevam Utthaan Mahabhiyan (PM-KUSUM), Solar Rooftop Phase II, 12000 MW CPSU Scheme Phase II, etc.

(5) Laying of new transmission lines and creating new sub-station capacity under the Green Energy Corridor Scheme for evacuation of renewable power.

(6) Notifying Bidding Guidelines for tariff based competitive bidding process for procurement of Power from Grid Connected Solar PV and Wind Projects.

(7) Declaring Large Hydro Power (LHPs) (>25 MW projects) as Renewable Energy source.

(8) Hydro Purchase Obligation (HPO) as a separate entity within Non-solar Renewable Purchase Obligation (RPO).

(9) Tariff rationalization measures for bringing down hydro power tariff.

(10) Budgetary Support for Flood Moderation/Storage Hydro Electric Projects (HEPs).

(11) Budgetary Support to Cost of Enabling Infrastructure, i.e. roads/bridges for hydro projects.

(a) Rs.1.5 crore per MW for projects upto 200 MW

(b) Rs.1.0 crore per MW for projects above 200 MW.

It may be noted that India has performed remarkably well in terms of its climate trajectory over the past decade. As compared to 2005 levels, the country’s GHG emission intensity declined by 21 percent in 2014.1 According to Climate Transparency, India is the only country among the G20 nations that is on track to achieve the targets set under the Paris Agreement.

In the World Economic Forum’s Energy Transition Index 2020, India, which was ranked 74th out of the 115 nations studied, was singled out as one of only 11 nations to have made “consistent and measurable progress on their energy transition over the past six years”.

Speaking at the United Nations Climate Ambition Summit in mid-December last year, Prime Minister Narendra Modi declared that India is on track to reach, and ultimately exceed, its ambitious renewable energy targets.

“India has reduced its emission intensity by 21 percent over 2005 levels,” he said at the virtual event, which marked five years since the adoption of the Paris Agreement on Climate Change. “Our renewable energy capacity is the fourth largest in the world. It will reach 175 gigawatts before 2022.”

India’s total installed capacity of renewable energy, not including hydropower, currently stands at 90 gigawatts. According to a year-end review by the Ministry of New and Renewable Energy, another 49.59 gigawatts of renewable energy capacity is under installation, and an additional 27.41 gigawatts of capacity has been tendered. This puts the total capacity of renewable energy projects already commissioned or in the pipeline at nearly 167 gigawatts.

As announced by Modi, he expects the country’s clean energy capacity to reach 220 megawatts by 2022 — besting the country’s 175-gigawatt target. India has an even more ambitious target of 450 gigawatts of renewable energy capacity by 2030. By that year, the government wants to meet half of the country’s power demand with renewable energy resources.

However, it is to be admitted that the covid pandemic in the country slowed down the pace of renewable energy deployment in India slowed significantly in 2020. Solar installations in the first nine months of the year totaled 1.73 gigawatts, marking a 68 percent decline from the same period in 2019, according to a study. Wind installations also fell dramatically.

Still, India’s renewables industry weathered the market turbulence. Central and state governments took steps to support the domestic clean energy sector last year, which have put low-carbon energy resources in a position to see continued growth and claim a greater share of India’s coal-heavy power system.

One key action the Modi government took to bolster clean energy in 2020 was to grant wind and solar projects “must-run” status, which means that their power cannot be curtailed except in conditions that would compromise grid stability. Renewables were insulated from the decline in electricity demand as a result, while coal plants took a major hit.

In a testament to India’s growing demand for low-cost and locally manufactured power, power minister R.K. Singh announced last fall that the country would boost its domestic solar manufacturing base to reduce reliance on solar cells and modules imported from China. He also announced that renewables would replace the generating capacity from 29 coal plants slated to retire in the coming years.

State-owned enterprise Coal India — the largest coal-producing company in the world — announced that it will enter the solar value-chain business and launch a new renewable energy vertical. The company received board approval to establish an integrated solar wafer manufacturing facility in December. There are also reports that other state-owned companies could be required to establish a domestic polysilicon supply chain.

In November, Prime Minister Modi announced that the government will offer new incentives for Indian-made solar modules, which follows an announcement that solar modules have been included in a production-linked incentive scheme to help make domestic players more competitive abroad.

In addition to the measures above, the Indian government extended commissioning deadlines for wind and solar projects already under development, taking into account that developers couldn’t get their workers and equipment to their construction sites amid the lockdowns.

“They gave a blanket five-month extension to all projects, which was really essential,” says Sumant Sinha, chairman and managing director of ReNew Power, India’s largest clean energy company.

Another significant step the government took to benefit the clean energy sector was to give power distribution companies (discoms) a roughly $13 billion liquidity injection as part of a stimulus package to shore up the Indian economy. The country’s discoms, which have long suffered from financial woes, fell deeper into debt due to weak power demand caused by the COVID-19 pandemic.

Because discoms purchase the power from renewable energy projects, the financial health of the utility sector is critical to keeping India’s clean energy transition moving forward.

Analysts note that utility bailouts also benefit thermal power plants. But according to Sinha, the stimulus funding was critical to ensuring that renewable energy generators continued to get paid on time.

“All of these steps have really been very positive,” said Sinha, who recently published the book Fossil Free focusing on the drivers of India’s clean energy transition and path ahead. “I think they indicate that the Indian government is very serious about supporting the growth of renewable energy and they are willing to do whatever is required to push the agenda forward on that front.”