Is India’s Future Renewable?

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  • 09 May 2023

Not long ago, our ancestors absolutely had no idea what “electricity” was. It seems funny today that ads in the newspapers were used to promote the use of electricity for lighting and heating purposes. And here we are today – with most of our surroundings connected to electricity. Well, today we will dive into this space and decode the future of renewables in India.

It was only by the early 1900’s that trams replaced horse driven carriages and ceiling fans replaced hand held punkhas. Yet, electricity was not so famous then. Fast forward to today, most things we do are connected to electricity, transitioning ourselves to the new slogan: Roti, Kapda, Makaan aur Bijli!

Power Demand Has Inched Up Gradually Over the Years

*Upto Sept 2022 Source: CEA, Kotak Institutional Equities

Power Demand Has Inched Up Gradually Over the Years

Since then, India’s energy demand continued to grow over the years and is expected to increase more in the future due to its rising population, size and enormous potential for economic expansion. The big question is how this growing need be met?

Coal Powers the Power

Coal, hydro, nuclear, biomass are among some sources of electricity generation. Majority of India’s generation came from coal or thermal power plants on the back of abundant coal reserves that India has. Coal made it possible to increase power production and develop industries.

No wonder coal is still the largest and most important source of energy for us. However, with growing needs, we realized these sources were conventional and needed alternatives. Along with its conventional nature, these sources raised the concerns of air pollution.

So, if India had to achieve its climate goals, it becomes crucial that growth in energy production come from renewable sources.

Coal to Clean

Today, the growth in coal power has levelled off, and new energy production is coming mainly from renewable sources such as wind and solar. Fortunately, the country also has 300 sunny days a year. The potential for solar or renewable energy for that matter is immense in India.

Despite that, the need for coal will not go away soon. The question is, would you be willing to pay extra for renewable energy just because it is clean?

Honestly, most Indians won’t. Along with the availability of natural resources, the costs of energy development are crucial too.

However, here’s the good news. Wind and solar power are becoming increasingly affordable to develop with time. Most of the power companies in India are now focusing on renewables and looking for the cheaper ways to produce it. While coal-based power generation continues to increase owing to the rising underlying demand, coal-based capacity addition has remained weak in the recent years.

Coal is Not Going Away Soon

*Upto Sept 2022 Source: CEA, Kotak Institutional Equities

Coal is Not Going Away Soon
Renewables On The Rise

On a year-to-date basis, as of September 2022, all-India capacities stand at 408 gigawatts (GW) led by renewable capacity addition of 8.2 GW. Renewable capacities continued to lead overall capacity addition in FY23 similar to FY22. All-India capacity now stands at 211 GW (coal), 25 GW (gas), 47 GW (hydro) and 118 GW (renewables).

Overcoming Challenges

Shifting to renewables is not going to be a cakewalk. The challenges are humongous. The sector itself is reeling under a number of pressures - tariff issues, storage problems, modules, PV cells and other equipment costs among others. Nevertheless, PM Modi has set ambitious goals of installation of 500 gigawatts of renewable energy capacity by 2030. A hallmark of this has been the decision to avoid carbon-intensive strategies while embarking upon the path of economic growth.

Apart from that, India has adopted a liberal foreign investment policy and permits 100% foreign direct investment (FDI) through the automatic route in this sector. Besides, private players are stepping up too.

So, all in all, we are on a fast track to witness India’s renewable future it seems. As our PM proudly stated…

“India has now graduated from megawatts to gigawatts in terms of renewable energy production.” – Narendra Modi.

And there's a long way to go...

References: IEEE explore

Times of India


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