How to Benefit from India's Renewable Energy Sector?

4 is the lucky number for India when it comes to the renewable sector. Wonder why? Well, India stands in the 4th position in the world in the following areas:

• Renewable Energy Installed Capacity (180.79 GW, including Large Hydro)
• Wind Power Capacity (44.736 GW)
• Solar Power Capacity  (74.30 GW)

With an increased focus on achieving ambitious targets like 500 GW of renewable energy capacity by 2030, India is rushing towards becoming a fossil-fuel-independent nation.

And that's not it. India has set steel-hard targets for the next upcoming years. Being the 3rd largest energy consumer in the world, it has presented the "Panchamrit” plan – believed to be the world's largest renewable energy sector expansion plan.

In this article, we will discuss:

• the Panchamrit plan,
• how India has developed compared to other countries, and
• what challenges are blocking the path to becoming a fossil fuel-free nation.

Overview of the Renewable Energy Sector

Trailing behind China & the United States, India needs the most energy to sustain its citizens. The Central Electricity Authority estimates India’s power requirement to grow to reach 817 GW by 2030. Most of the demand will come from the real estate and transport sectors.

Despite implementing new policies like Pradhan Mantri Suryodaya Yojana and free electricity up to 300 units, India fulfils its energy demand by traditional methods. The volume of electricity produced from renewable sources has been growing gradually.

In terms of various kinds of renewable energy, India and its government have been implementing set goals and installing advanced plants to meet them.

a. Solar Power: Jawaharlal Nehru National Solar Mission was created in 2010 with a target to achieve 20 GW of grid energy by 2022, which later extended to 100 GW.

b. Wind Energy: Despite being new in the sector, India is the fourth largest wind producer in the world. Producing 34,293 MW in 2023, India had set a target to achieve 60,000 MW of electricity by 2022.

c. Hydroelectric Energy: In this sector, India holds the 5th position globally.

d. Bioenergy: Biomass, biogas, bioprotein, biofuels, etc., are also included among the areas focused on renewable energy production. IREDA, the Indian Renewable Energy Development Agency, has stated that biomass has the potential to supplement coal by approximately 260 million tonnes, leading to savings of approximately ₹25,000 crore per annum.

This indicates that biomass may be a viable alternative to coal in terms of its energy generation capabilities.

Panchamrit Plan for a Bright Future

At the 26th United Nations Climate Change Conference, also known as COP26, India's Prime Minister Narendra Modi announced five Panchamrit targets. They are:

"(i) India will reach its non-fossil energy capacity of 500 GW by 2030,
(ii) India will meet 50 percent of its energy requirements from renewable energy by 2030,
(iii) India will reduce the total projected carbon emissions by one billion tonnes from now onwards till 2030,
(iv) By 2030, India will reduce the carbon intensity of its economy by less than 45 percent, and
(v) By 2070, India will achieve the Net Zero target."

Strengths of Renewable Sector:

The government's commitment, cost competitiveness, and diverse resource potential position India as a global leader in the transition to clean energy.

a. Ambitious government targets and supportive policies: The Green Hydrogen Mission and Production Linked Incentive (PLI) schemes for solar modules and batteries promote domestic manufacturing and innovation.

b. Diverse resource potential: India has abundant solar, wind, biomass, and hydropower resources, offering a diversified energy mix.

c. Growing investment: The sector attracts significant domestic and foreign investments, exceeding US$240 billion (₹19.92 trillion) potential.

d. Technological advancements: Cost reductions in solar and wind technologies have made them increasingly competitive with conventional sources. PM Suryodaya Yojana and announcements for free electricity with solar panel installations have been received warmly.

e. Private sector participation: Increased involvement of private players has brought in much-needed capital and expertise.

f. Focus on innovation: Exploring new areas like green hydrogen demonstrates India's commitment to staying at the forefront of clean energy solutions.

Despite challenges, India's renewable energy sector is on a positive trajectory. But these challenges still create a major challenge for the set targets.

Challenges & Their Solutions:

Addressing grid integration, financing, and manufacturing hurdles will be crucial for achieving ambitious targets and ensuring sustainable growth.

a. Grid Integration:

Integrating renewable energy sources into the grid infrastructure is a significant challenge. It can cause grid instability, power fluctuations, and blackouts, hindering reliable power supply. Effective solutions need to be developed for efficient integration.

Solution: Upgrading and expanding transmission infrastructure, investing in energy storage solutions like battery banks, and implementing smart grid technologies are crucial for effective grid integration.

b. Land Acquisition and Permitting:

Acquiring land for renewable energy projects, especially in densely populated areas, can be lengthy and complex due to multiple stakeholders, regulatory hurdles, and social concerns. Obtaining necessary permits can also be time-consuming and bureaucratic.

Delays in land acquisition and permitting can significantly hinder project development, leading to cost escalations and missed deadlines.

Solution: Streamlining land acquisition procedures, promoting community engagement, and establishing single-window permit clearance mechanisms can expedite project development.

c. Financial Viability of Discoms:

Financial issues of state-owned electricity distribution companies (AKA discoms) can impact timely payments to renewable energy generators. Factors like high transmission and distribution losses, inefficient billing and collection systems, and subsidised tariffs are the major reasons for this difficulty.

Solution: Reforms in the power sector to improve discoms' financial health, including tariff rationalisation, reducing losses, and promoting energy efficiency measures, are essential for ensuring timely payments to renewable energy generators.

d. Manufacturing Ecosystem:

While India has made strides in domestic manufacturing of solar modules, dependence on imported components and equipment for other renewable technologies like wind turbines and batteries exists. This reliance on imports can increase costs and expose the sector to global supply chain disruptions.

Limited domestic manufacturing capacity can hinder cost competitiveness and make the sector vulnerable to external factors.

Solution: Government initiatives like Production Linked Incentive (PLI) schemes and promoting research and development in domestic manufacturing can strengthen the domestic renewable energy equipment ecosystem.

e. Expensive Resources & Installations:

While solar and wind power costs have declined significantly, the initial investment required for setting up these projects can still be high, especially when compared to conventional sources.

High upfront costs can limit the accessibility and scalability of renewable energy projects, particularly in distributed generation applications.

Solution: Innovative financing models, such as green bonds and rooftop solar financing schemes, can help bridge the financing gap and make renewable energy projects more accessible.

f. Less Awareness:

Limited public awareness about the benefits of renewable energy, including environmental advantages and cost competitiveness, can hinder social acceptance and support for renewable energy projects.

Solution: Public awareness campaigns highlighting the benefits of renewable energy, community engagement initiatives, and promoting success stories can foster greater understanding and support for the sector.

The Bottom Line

Addressing these challenges and capitalising on strengths will be crucial for India to achieve its clean energy goals. As a developing country, India has shown immense potential and advancements in the renewable energy sector and has presented a glorious example for other countries to carry on.

Wish to learn more about other investment sectors like renewable energy? Know the best sectors from the article: Top 7 Fastest-Growing Industries in India

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