29 Jul 2021
Introduction
Indian renewable energy sector is the fourth most attractive renewable energy market in the world1. India was ranked fifth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2019.
Installed renewable power generation capacity has gained pace over the past few years, posting a CAGR of 17.33% between FY16-20. With the increased support of Government and improved economics, the sector has become attractive from investors perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role. The government is aiming to achieve 227 GW of renewable energy capacity (including 114 GW of solar capacity addition and 67 GW of wind power capacity) by 2022, more than its 175 GW target as per the Paris Agreement. The government plans to establish renewable energy capacity of 500 GW by 2030.
Market Size
As of November 30, 2020, the installed renewable energy capacity stood at 90.39 GW, of which solar and wind comprised 36.91 GW and 38.43 GW, respectively. Biomass and small hydro power constituted 10.14 GW and 4.74 GW, respectively. By December 2019, 15,100 megawatts (MW) of wind power projects were issued, of which, projects of 12,162.50 MW capacities has already been awarded2. Power generation from renewable energy sources in India reached 127.01 billion units (BU) in FY20.
With a potential capacity of 363 GW and with policies focused on the renewable energy sector, Northern India is expected to become the hub for renewable energy in India.
Investments/ Developments
According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflow in the Indian non-conventional energy sector stood at US$ 9.68 billion between April 2000 and September 2020. More than US$ 42 billion has been invested in India’s renewable energy sector since 2014. New investment in clean energy in the country reached US$ 11.1 billion in 2018.
Some major investments and developments in the Indian renewable energy sector are as follows:
Government initiatives
Some initiatives by Government of India to boost India’s renewable energy sector are as follows:
Road Ahead
The Government is committed to increased use of clean energy sources and is already undertaking various large-scale sustainable power projects and promoting green energy heavily. In addition, renewable energy has the potential to create many employment opportunities at all levels, especially in rural areas. The Ministry of New and Renewable Energy (MNRE) has set an ambitious target to set up renewable energy capacities to the tune of 227 GW by 2022, of which about 114 GW is planned for solar, 67 GW for wind and other for hydro and bio among other. India’s renewable energy sector is expected to attract investment worth US$ 80 billion in the next four years. About 5,000 Compressed Biogas plants will be set up across India by 2023.
It is expected that by 2040, around 49% of the total electricity will be generated by renewable energy as more efficient batteries will be used to store electricity, which will further cut the solar energy cost by 66% as compared to the current cost. * Use of renewables in place of coal will save India Rs. 54,000 crore (US$ 8.43 billion) annually3. Renewable energy will account for 55% of the total installed power capacity by 2030.
As per the Central Electricity Authority (CEA) estimates, by 2029-30, the share of renewable energy generation would increase from 18% to 44%, while that of thermal is expected to reduce from 78% to 52%.
The primary objective for deploying renewable energy in India is to advance economic development, improve energy security, improve access to energy, and mitigate climate change. Sustainable development is possible by use of sustainable energy and by ensuring access to affordable, reliable, sustainable, and modern energy for citizens. Strong government support and the increasingly opportune economic situation have pushed India to be one of the top leaders in the world’s most attractive renewable energy markets. The government has designed policies, programs, and a liberal environment to attract foreign investments to ramp up the country in the renewable energy market at a rapid rate. It is anticipated that the renewable energy sector can create a large number of domestic jobs over the following years. This paper aims to present significant achievements, prospects, projections, generation of electricity, as well as challenges and investment and employment opportunities due to the development of renewable energy in India. In this review, we have identified the various obstacles faced by the renewable sector. The recommendations based on the review outcomes will provide useful information for policymakers, innovators, project developers, investors, industries, associated stakeholders and departments, researchers, and scientists.
India is witnessing a radical change on account of the government’s move towards power generation via renewable energy resources; Government has set a target to achieve175 GW renewable energy installed capacity by 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power. Further, with increased focus on offshore wind power, floating solar parks and hybrid parks etc., it is expected to ove rachieve the target by 2022. The increased focus of Government of India (GOI) towards renewable energy has created attractive opportunities for investments in this sector. Government has rightly recognized RE to be seen not only as sources of energy, but also a tool to address many other pressing needs, including improving energy security and access; reducing the health and environmental impacts and mitigating greenhouse gas emissions.
In order to facilitate integration of large scale renewable generation capacity addition, the Government approved creation of intra-state transmission system in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu rich in renewable resource potential and where large capacity renewable power projects are planned, at an estimated cost of Rs.10,141.68 crore with Government of India contribution from National Clean Energy fund 40%. The activities envisaged under the project includes establishment of 48 new Grid sub-stations of different voltage levels by installing over 7800 ckt-kms of transmission lines in these seven states. The project is proposed to be completed within a period of three to five years. Creation of an intra-state transmission system will facilitate evacuation of renewable power from generation stations to load center.
At present India is fifth largest country in the world in electricity generation, having presently aggregate capacity of 360 GWs as on July’ 2019, out of which approximately 63% is from thermal, 12.5% from hydro, 2% from nuclear and the rest about 22% is from renewable energy sources. Although Indian power sector has experienced a more than ten-time increased in its installed capacity in 1981 to till date but still there is need to be establish more generation plants preferably to be come from renewable sources by governmental as well as various private participation.Contribution of renewable energy sources in the total capacity as well as gross generation is still very low. The Indian power sector is predominantly based on fossil fuels, with more than about three-fourth of the country’s power generation capacity being dependent on vast indigenous reserves of coal. But in few last decades Indian government has taken several steps to reduce the use of fossil fuels-based energy while promoting renewable generation. Core drivers for development and deployment of new and renewable energy in India are Energy security, Electricity shortages, Energy access and Climate change.India has taken a voluntary commitment of reducing emission intensity of its GDP by 33-35 per cent from 2005 levels by 2030.
The Government has also approved a Scheme, in December 2014, for setting up of 25 Solar Parks, each with the capacity of 500 MW and above and Ultra Mega Solar Power Projects to be developed in next 5 years in various States and will require Central Government financial support. These parks will be able to accommodate over 20,000 MW of solar power projects. As on date, parks with capacity of about 20,000 MW in 22 states have been sanctioned. Globally China is the country leading first position in renewable installed capacity in the world. With regard to source-wise installed capacity, world-wide China is leading first position in Solar Energy, Wind Energy and Small Hydro power. India’s total power generation installed capacity reached 360 GW by July’ 2019 with coal-fired plants accounting for 195.80 GW of this installed capacity, followed by renewables that come in at over 80 GW. Hydropower projects, gas-based, nuclear and diesel projects make up the remaining capacity in decreasing order of installed capacity. The Government has taken several initiatives to accelerate the growth RE. The key provisions under the different Acts/Policies/Schemes issued by the Central Government and fiscal / promotional incentives for development of renewable energy in the country have been discussed in this article.
Solar and Wind power being infirm in nature impose certain challenges on grid security and stability. Solar and winds are almost complementary to each other and hybdridation of two technologies would help in minimizing the variability apart from optimally utilizing the infrastructure including land and transmission system. The existing wind farms have scope of adding solar PV capacity due to placing wind turbines 7D x 5D criteria and similarly there may be wind potential in the vicinity of existing solar PV plant. Suitable policy interventions are required not only for new wind-solar hybrid plants but also for encouraging hybridization of existing wind and solar plant.
The main objective of the Policy is to provide a framework for promotion of large grid connected wind-solar PV system for optimal and efficient utilization of transmission infrastructure and land, reducing the variability in renewable power generation and thus achieving better grid stability. Policy aims to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV plants. The Goal of the Policy is to reach wind-solar hybrid capacity of 10 GW by 2022. Policy empowers the Central Commission to lay down the guidelines for determination of generic tariff for wind-solar hybrid system. Further, the Commission is required to frame regulations for forecasting and scheduling for the hybrid system. The Government will encourage development of wind-solar hybrid system through various incentives. All fiscal and financial incentives available to wind and solar power projects may also be made available to hybrid projects. Low cost financing for hybrid projects may be made available through IREDA and other financial institutions.
India has vast coastline of 7600 km considering the development of offshore wind energy in the Indian Exclusive Economic Zone, the National offshore wind energy policy was approved and notified by the Central Government in October, 2015. Under this Policy, the Ministry of New & Renewable Energy (MNRE) has been authorized as the Nodal Ministry for use of offshore areas within the Exclusive Economic Zone of the country and the National Institute of Wind Energy (NIWE) has been authorized as the Nodal Agency for development of offshore wind energy in the country and to carry out allocation of offshore wind energy blocks, coordination and allied functions with related ministries and agencies. It would pave the way for offshore wind energy development including, setting up of offshore wind power projects and research and development activities, in waters, up to the seaward distance of 200 Nautical Miles (EEZ of the country) from the base line. The policy will provide a level playing field to all investors/beneficiaries, domestic and international. Initial studies carried out by National Institute of Wind Energy indicate offshore wind power potential in Gujarat and Tamil Nadu.The Government is planned to set up the first offshore wind power project at the Gujarat coast soon.
The wind power potential in the country is assessed by the National Institute of Wind Energy (NIWE) at 100 meter above ground level, which is estimated to be over 302 GW. Most of this potential exists in 8 windy States namely Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Telangana. In order to facilitate transmission of wind power from these windy States to non-windy States provisions have been made in the Tariff Policy to waive the inter-state transmission charges and losses for wind power projects. A need has been felt to formulate a scheme for supply of wind power to the non-windy states at a price discovered through transparent bidding process. This scheme encourages competitiveness through scaling up of project sizes and introduction of efficient and transparent e-bidding and e-auctioning processes. It also facilitates fulfillment of Non-Solar Renewable Purchase Obligation (RPO) requirement of non-windy states.
The Scheme will be implemented for setting up 1000 MW capacity of CTU connected Wind Power Projects by Wind Project Developers on build, own and operate basis. However, the capacity may go higher than 1000 MW, if there is higher demand from Discoms of non-windy States. The selection of wind power projects under the Scheme will be through a transparent e-bidding process followed by e-reverse auction for eligible bidders for procurement of wind power at tariff discovered through open competitive bidding process. SECI will develop guidelines for e-bidding process. Eligible project capacity for bidding will be minimum 25 MW and maximum 500 MW by a bidder.
India is endowed with a very vast solar energy potential. Most parts of the country have about 300 sunny days. Average solar radiation incident over the land is in the range of 4-7 kWh per day. The solar energy utilized through solar photovoltaic technology which enables direct conversion of sunlight into energy and solar thermal technologies which utilizes heat content of solar energy into useful applications. Over the last three decades several solar energy based systems and devices have been developed and deployed in India which is successfully providing energy solutions for lighting, cooking, water heating, air heating, and drawing and electricity generation. As a result many solar energy systems and devices are commercially available with affordable cost in the market.
Jawaharlal Nehru National Solar Mission was launched on 11th January, 2010. The Mission targets include (i) deployment of 20,000 MW of grid connected solar power by 2022, (ii) 2,000 MW of off-grid solar applications including 20 million solar lights by 2022, (iii) 20 million sq. m. solar thermal collector area, (iv) to create favourable conditions for developing solar manufacturing capability in the country; and (v) support R&D and capacity building activities to achieve grid parity by 2022.
For the first phase of the Mission, the Government had approved a target to set up 1,100 MW grid connected solar plants including 100 MW capacity as rooftop and other small solar power plants till March 2013. In addition, a target of 200 MW capacity equivalent off-grid solar applications and 7 million square meter solar thermal collector area were also approved. The Government had also approved setting up of large utility scale grid power plants through bundling of solar power with the unallocated thermal power available from NTPC stations and the policy to provide generation-based incentive for small grid connected solar power plants. The government has also approved revision of cumulative targets under National Solar Mission from 20,000 MW by 2021-22 to 1,00,000 MW by 2021-22 for Grid Connected Solar Power Projects. The revised target of 1,00,000 MW is planned to be achieved during this period and broadly consist of 40 GW Grid connected Rooftop projects and 60 GW large and medium size land based solar power projects.
The wind power potential in the country is assessed by the National Institute of Wind Energy at 100 meter above ground level, which is estimated to be over 302 GW. Most of the wind power potential is concentrated in 8-9 wind resource rich states. These windy states may not consume wind power beyond their RPO limit and therefore, wind power is to be evacuated from these resources rich states to the off-taker states. This requires strengthen transmission intra-state as well as inter-state transmission infrastructure. Green Energy Corridors Project that has identified transmission requirement for the renewable power capacity addition during 12th plan period is under implementation. Intra-state transmission infrastructure projects in eight states have already been approved. The project is at different stages of implementation in states.
In order to facilitate integration of large scale renewable generation capacity addition, the Government approved creation of intra-state transmission system in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu rich in renewable resource potential and where large capacity renewable power projects are planned with Government of India contribution from National Clean Energy fund 40%. The activities envisaged under the project includes establishment of new Grid sub-stations of different voltage levels by installing over 7800 ckt-kms of transmission lines in these states. The project is proposed to be completed within a period of three to five years. Creation of an intra-state transmission system will facilitate evacuation of renewable power from generation stations to load centre
Preferential tariff is being provided to increase renewable energy generation in the potential states. Most wind potential states have announced the preferential tariffs. State Regulatory Commission’s have announced the Renewable Purchase Obligations (RPO’s), which mandates the Distribution Licensees to take certain percentage of electricity from renewable, which has accelerated the growth.Generation Based Incentive (GBI) also allowed by the Central Government on grid interactive wind power projects commissioned on after 01.04.2012. The GBI shall be @ Rs. 0.50 per unit of electricity fed into the grid with a cap of Rs. 100 Lakhs per MW. The incentive will be for a minimum period of 4 years and maximum period of 10 years with a cap ofRs. 100 Lakhs/MW.
The Government promotes renewable energy sector in the country through fiscal incentives such as concessional custom duty on certain components of renewable energy system, excise duty exemption, exemption on Special Additional Duty, ten years tax holiday on income generated from renewable power projects, and loan from Indian Renewable Energy Development Agency and other financial institutions. Exemption / reduction in Central Sales Tax and General Sales Tax available on sale of renewable energy equipment in various states. The accumulated depreciation was earlier allowed @80% on the machines installed on or after 01.04.2014 has now been revised to maximum 40% from 01.04.2017.Beside the above incentive provided by the Central Government, some State Governments have also provided the state specific incentive through respective state renewable energy promotional policies.Some of the common incentives provided by State Governments are as follows:
Renewable Purchase Obligation (RPO) is a mechanism by which the State Electricity Regulatory Commissions are obliged to purchase a certain percentage of power from renewable energy sources. RPO is being implemented throughout the country to create demand for renewable energy. RPO is of two categories – Non-Solar and Solar. Under the solar obligation, every State in the country has announced a solar specific percentage as part of overall Renewable Purchase Obligation. RPOs are enforced on three categories of consumers –Distribution Licensees, Open Access Consumers and Captive Consumers.
Electricity Act 2003 and the National Tariff Policy provide for the appropriate Commission to specify for purchase of electricity from RE sources, a percentage of the total consumption of electricity in the area of a distribution licensee. The Central Electricity Regulatory Commission also plays a facilitator role. Therefore, most SERCs have, by way of RPO regulations, specified RPO targets for solar and non-solar energy; On the whole, the objective of Government policy and regulations, was to, over a period of time, progressively increase the share of electricity from non-conventional sources by mandating obligated entities to purchase a specified minimum percentage of their total power consumption including losses from non-conventional sources.
A variable characteristic of renewable energy sources is the fluctuation and unpredictability of their load supply, which makes it challenging to manage the grid in real time. For the large scale integration of renewable energy with the main grid, a fine balance has to be developed between renewable generation and transmission system flexibility. For managing the variability and unpredictability of renewable energy generation, accurate forecasting is crucial for grid management and security. The issue could be addressed through proper forecasting and scheduling of wind and solar power.
The framework on Forecasting, Scheduling and Imbalance handling for variable wind and solar energy and state model regulations have opened up the market for these generators at the intra-state level. To account for deviations by all generators, including RE generators, all states need to put in place the prescribed ABT framework. The CERC have already issued mechanism for scheduling and forecasting of inter-state transmission of solar and wind power. Karnataka become the first state in the country to issued and notified the regulation for scheduling and forecasting of renewable power. The States of Rajasthan, Tamil Nadu, Madhya Pradesh and Jharkhand have also notified regulations for intra-state transmission of infirm power. The National Institute of Wind Energy (NIWE) has undertaken forecasting and scheduling exercise in the State of Tamil Nadu wherein industry association is financing the work taken up by NIWE to provide forecast for the whole state. Similar initiatives have been carried out by the Rajasthan and Gujarat states. For proper forecasting and scheduling it is necessary to put in place metering and communication infrastructure at all pooling stations for real time generation of data.
In order to facilitate storage of surplus power and ensure grid security, the Government is promoting energy storage projects by providing several physical incentives for these projects. Regulators are also framing separate regulations for promotion of energy storage projects in the respective states. Energy storage not only provides means to absorbed higher penetration of variable wind and solar generation into the electricity system, it also helps in effective utilization of transmission and distribution assets and enables the thermal generation plants to operate efficiently. Energy Storage projects is one of the most effective solution to address the lack of scheduling of renewable sources. These projects are required to be given a special status as they provide a mechanism to convert infirm power to firm power within a short period and ensure scheduling of renewable power in inter and intra state transactions
Energy storage systems are an alternative option for both grid-connected and off-grid renewable energy systems. It also helps in strengthen the intermittent power flow from renewable energy sources. It captures the excess energy generated from renewable energy sources during low demand times in order to dispatch it during high demand times. Storage also helps in mitigating rapid changes in generation from renewable energy sources, which could be due to wind speed variability affecting generation or lower solar generation due to clouds. In such cases the stored energy offset outages. Energy storage separates generation from demand and thereby increases both grid flexibility and performance. Storage can reduce outages, lower pollution from fossil fuels and eventually enable a complete reliance on renewable sources.
CONCLUSION:
It may be concluded that renewable energy development is of great importance from the point of view of long term energy supply security, decentralization of energy supply particularly for the benefit of the rural population, environmental benefits and sustainability in power sector. Indian Government has set an ambitious target of reaching 175 GW of installed capacity from renewable energy sources by the year 2022. Various policy initiatives have been taken by the Government to achieve this target. Many SERCs have yet to take concrete steps to actually implement these policies due to lack of resources that might assist in performing their functions- most notably, enough professional staff and lack of sufficient monitoring and enforcement Mechanism. There is need of separate regulatory framework/setup for renewable energy to accelerate the renewable energy development programme in the country.
The renewable sector suffers notable obstacles. Some of them are inherent in every renewable technology; others are the outcome of a skewed regulative structure and marketplace. The absence of comprehensive policies and regulation frameworks prevent the adoption of renewable technologies. The renewable energy market requires explicit policies and legal procedures to enhance the attention of investors. There is a delay in the authorization of private sector projects because of a lack of clear policies. The country should take measures to attract private investors. Inadequate technology and the absence of infrastructure required to establish renewable technologies should be overcome by R&D. The government should allow more funds to support research and innovation activities in this sector. There are insufficiently competent personnel to train, demonstrate, maintain, and operate renewable energy structures and therefore, the institutions should be proactive in preparing the workforce. Imported equipment is costly compared to that of locally manufactured; therefore, generation of renewable energy becomes expensive and even unaffordable. Hence, to decrease the cost of renewable products, the country should become involve in the manufacturing of renewable products. Another significant infrastructural obstacle to the development of renewable energy technologies is unreliable connectivity to the grid. As a consequence, many investors lose their faith in renewable energy technologies and are not ready to invest in them for fear of failing. India should work on transmission and evacuation plans.
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