Meeting the Clean Energy Goal

There is a need to create a dedicated entity to address the challenges facing renewable energy in India

By Disha Agarwal & Neeraj Kuldeep

The year 2022 could be a pivotal year for India’s energy transition. Recently, some of India’s largest energy companies – Reliance Industries Ltd, Adani Group and NTPC Ltd – had announced massive investments in renewable energy (RE), mainly solar, to herald their transition to a low-carbon future. Additionally, according to the CEEW Center for Energy Finance, in 2021, Indian renewable energy companies raised a record $5.9 billion through “green bonds” in overseas debt markets. Despite these positive signals, the task ahead of us remains herculean. As of 2016, the average RE deployment rate in India is around 10 GW per year. That must almost quadruple if renewables were to make up at least 85% of the government’s target to have 500 GW of clean energy capacity in place by 2030. years to come?

Over the past decade, India has been at the forefront of adopting innovative approaches and solutions to boost the prospects of its renewable energy sector. Of all the measures taken, three have changed the situation: tariff consolidation to make solar an acceptable option for electricity distribution companies (discoms); promote solar farms to achieve scale and speed of deployment; and the establishment of payment security mechanisms to reduce the risks associated with investments in renewable energy projects. More recently, regulators have introduced new electricity trading platforms such as the Real Time Market (RTM) to facilitate grid management. As we prepare for the decade-long marathon, we recommend three critical priorities that must be at the heart of the next phase of India’s energy transition.

First, build a diverse tech mix. In recent years, utility-scale solar PV has become the most preferred technology choice as policymakers target cost reduction and economies of scale. However, India also has huge potential to promote alternative technologies and applications such as floating and rooftop solar power, onshore decentralized wind, offshore wind, small hydropower and grid power. biomass. For perspective, decentralized onshore wind projects of up to 50MW could tap into underutilized state transmission networks in windy states beyond Tamil Nadu and Gujarat, which host nearly 50% of wind capacity. total installed today.

Likewise, floating solar has huge potential, exceeding 2,400 GW in eastern states, which are otherwise unattractive for onshore wind or utility-scale solar. Efficient rooftop solar projects could provide benefits to consumers in the northeast. Diversifying our technology mix would not only provide flexibility and resilience to our power system, but also bring the desired socio-economic benefits by bringing the transition closer to communities.

Second, support the creation of demand for renewable energy. Today, financially challenged utilities are struggling to increase the share of renewables in their portfolios. Only four states met or exceeded their revolving procurement obligation in 2019-20. Adverse policy measures in some states have made it difficult for large consumers to switch to cheaper renewable energy sources. For example, only 12% of the total installed large-scale solar capacity is open access today. However, with advances in storage technologies and falling costs, it would be possible for consumers to reduce the network contract load. Therefore, nightclubs could take advantage of technological and market developments to meet the needs of their highest-paying consumers.

In addition, freeing discoms from contracts with old and inefficient coal-fired power plants could create the leeway needed to source renewable energy and other flexible resources through market platforms. Partially indexed RE tariffs could be another immediate solution to increase the attractiveness of RE for both clubs and developers.

Third, transform institutions. Meeting the 2030 targets would require us to accelerate project development, improve implementation efficiency, strengthen procurement processes, and improve transparency on RE resource potential and grid infrastructure. . It also calls for the creation of mechanisms for faster resolution of power purchase agreement disputes, late payments and reduced power generation. A dedicated entity, mandated to deal with these issues, could ensure a coordinated and systematic development of projects. To this end, the Solar Energy Corporation of India could be empowered to become the National Renewable Energy Corporation (NREC). The NREC could act as a single point entity for renewable energy producers. The NREC would also facilitate better coordination between the Center and the State and a diverse mix of RE technologies. This would help build trust between existing and potential investors.

At COP26, India once again showed its commitment to real climate action. In the 2022 Union Budget, India must back its ambition with actions. Success in creating enabling frameworks would give new wings to India’s renewable energy story.

The author is Program Manager at the Council on Energy, Environment and Water (CEEW)

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