POWER GREEN BHARAT

India is rapidly advancing toward becoming a global leader in renewable energy, driven by collective efforts from government agencies, private sectors, and institutions. However, challenges in grid stability and capital investment remain critical.

India is rapidly advancing towards becoming a green power hub. Government agencies, private parties, institutions, and associations are highly optimistic about the country’s goal to emerge as a global leader in renewable energy. This collective enthusiasm underscores the nation’s commitment to a sustainable energy future. Irrespective of the measures being taken to achieve the goal, challenges must be addressed. The challenge of maintaining grid stability amidst the rapid expansion of intermittent energy sources is becoming increasingly critical.

The transition from traditional fossil fuels to a cleaner energy landscape presents unique hurdles, demanding innovative solutions to ensure that the grid remains reliable and power quality is upheld. Despite substantial investments flowing into the renewable energy sector, additional capital is still needed to accelerate growth and address various challenges. The ongoing need for infrastructure development, technological advancements, and market expansion drives this need. Continued investment is essential to support innovation, reduce costs, and achieve long-term sustainability goals in renewable energy.

Let us explore the advancements made so far and the multifaceted strategies employed to address the sector’s challenges. We will draw insights from industry experts and examine emerging trends within the sector.

Ensuring grid stability in the growing renewable energy sector

In a rapidly expanding renewable energy sector, ensuring grid stability and maintaining power quality is becoming a critical challenge. The increasing integration of intermittent renewable sources like solar and wind into the grid is leading to significant changes in the power utilisation curve. While renewable energy holds great promise, ensuring grid stability will require a combination of strategic investments, innovative technologies, and coordinated efforts from all stakeholders in the energy sector.

Shirish S Garud, Consultant and Ex-Director of TERI, emphasises the shifting demand patterns driven by economic growth. “With more air conditioners in use and the rise of electric vehicles, the load on the grid is becoming unpredictable,” he notes. Additionally, the growing adoption of rooftop solar systems introduces variability into the grid, requiring sophisticated demand prediction and storage solutions. Sabyasachi Majumdar, Senior Director of CARE Ratings, highlights the need for supply and demand interventions. “Thermal power, including coal and gas, will remain a part of the energy mix for the next 5 to 10 years,” he points out. He also stresses the importance of ramping up battery and pumped storage solutions to smooth out fluctuations. Sanjiv Prasad, Head – Power Utilities and ETP- RIL DMD, brings attention to the complexities of grid stability. “Renewable energy is not yet at a scale where it can significantly affect the grid,” he explains. However, he acknowledges that as solar generation peaks, the grid’s frequency can be impacted due to the slower response times of thermal power plants. He suggests smarter controls and real-time data integration to maintain grid stability.

Labanya Jena, Sustainable Finance Specialist- IEEFA points out the financial challenges of mitigating intermittency through storage solutions. “Certain technologies, like battery storage and green hydrogen, are not yet commercially viable,” he observes. He calls for consistent and patient capital investment

and government support to make these technologies viable in the long term. “We cannot compete with countries like China on storage capacity without substantial financial backing,” he warns.

Emerging trends in private sector investment

The future of renewable energy financing hinges on a blend of innovation, international cooperation, and effective policy frameworks. While challenges remain, the evolving landscape of green bonds, transition bonds, and sustainable investments offers a hopeful path toward a greener, more sustainable future. Shirish Garud emphasises the importance of institutional finance in the early stages of renewable energy projects. “Initially, renewable energy projects rely heavily on institutional finance during construction,” he explains. “Once operational, private investors step in, often supported by international capital and green bonds. With their long-term horizons, pension funds play a crucial role here.”

Lavanya Jena, known for his critical analysis, says, “Green bonds have been romanticised, but the reality is more nuanced. Issuers face additional costs for certification and due diligence. The green premium, once an attractive feature, has dwindled. Despite a rise in green bond issuance, the growth rate has slowed, reflecting a lack of premium benefits for issuers. However, international capital remains crucial for managing climate transition risks, and innovations like sustainability-linked bonds and securitised green bonds could provide new avenues for financing.” Lavanya continues, “India, for instance, could benefit significantly from transition bonds, which can support industries struggling to decarbonise. These bonds offer a way to fund long-term investments in low-carbon technologies, essential for hard-to-decarbonise sectors.” Shirish Garud highlights international negotiations, “Developing countries, including India, face high capital costs for green energy due to new technologies and scale inefficiencies. International discussions have focused on climate funds and technology transfers. Unfortunately, the promised $100 billion climate fund from the Paris Agreement has seen minimal progress, impacting the availability of low-cost financing.”

Sanjeev Prasad emphasises the growing interest in hydrogen as an investment. “Hydrogen holds significant potential, especially in its application beyond just fuel. While hydrogen as a fuel offers lower yields, its use in producing other products can provide substantial returns. The challenge is aligning these emerging trends with investment strategies.” Subrahmanyam shares insights on the role of international collaborations and innovative financing, “One notable initiative is the One Sun One World plan, aimed at creating a global solar power network. For India, balancing renewable energy growth with the increasing demand is critical. Innovative financing, such as virtual power purchase agreements, could facilitate the transition. Yet, regulatory clarity is needed to harness these tools effectively.” He also addresses the need for deeper energy trading markets and enhanced transmission networks. “India’s energy trading market lags behind Europe, and integrating interstate transmission can optimise power distribution. Additionally, leveraging hydro capacity from neighbouring countries could supplement India’s energy needs,” he says.

Role of decentralised renewable energy in rural electrification

Rural communities are no longer left in the dark in this evolving energy landscape. With decentralised renewable energy lighting the way, they are poised to thrive in a future where power is abundant, reliable, and sustainable.

There is a growing need for reliable electricity in agriculture-heavy rural areas. Traditionally, irrigation systems were powered during off-peak hours to balance grid demands, relying heavily on thermal power plants. However, as solar energy gains traction, this model is being upended. Sabyasachi Majumdar explains, “With the rise of solar power, we are witnessing a significant shift. Solar energy can create surpluses during the day, challenging traditional grid systems. Decentralised solar generation offers a solution by producing energy locally, reducing transmission losses and enhancing reliability.” Sabyasachi’s vision of a solar-powered rural future is not far-fetched. Under initiatives like the PM Kusum scheme, small-scale solar power plants are installed near agricultural feeders. These plants support irrigation and other rural needs, ensuring that power is generated near where it is consumed.

“The PM Kusum scheme is a game-changer,” says Shirish Garud. “It promotes the installation of solar power plants up to 2 MW, tailored to meet the needs of rural communities. This approach helps stabilise power supply and improves quality by keeping generation and consumption in close proximity.” The Surya Ghar Yojana, another significant initiative, supports rooftop solar installations by offering direct subsidies. Shirish adds, “This scheme not only encourages the adoption of solar energy but also stimulates the domestic solar industry. It is a win-win for both rural households and small businesses.” Despite the advantages of solar power, challenges remain particularly its intermittency. Solar panels generate electricity during the day but cease production at night. Storage solutions are crucial to bridging this gap. “The cost of storage is coming down, making it a more feasible option for rural areas,” notes Subhramanyam. “Coupling solar power with storage ensures a steady power supply, even when the sun is not shining,” he says. Subhramanyam emphasises that while decentralised systems are beneficial, integrating storage is essential for maintaining a reliable energy supply. “We are at a point where storage technologies are becoming more affordable, and this is key to making decentralised solar power a viable long-term solution,” he explains.

Beyond solar power, other renewable sources are being explored to enhance rural electrification. Biomass and biogas technologies, which utilise agricultural waste, offer additional energy solutions. “Compressed biogas (CBG) from agricultural waste is a valuable resource,” says Subhramanyam. “It generates electricity and supports local waste management and economic activities.” He highlights their impact, “Microgrids powered by a mix of solar, biomass, and biogas are transforming rural areas. They ensure that energy needs are met sustainably and locally.” As the sun sets over the rural landscape, it is clear that the decentralised renewable energy revolution is not just a promise but an emerging reality. The combined efforts of government schemes, technological advancements, and innovative projects pave the way for a brighter, more connected future. Sabyasachi concludes, “The move towards decentralised energy is essential for rural development. We are creating a more resilient and sustainable energy system by harnessing solar power, integrating storage solutions, and exploring other renewables. This shift is crucial for fostering growth and prosperity in rural India.”

The transition to renewable energy shows promising advancements, but overcoming grid stability and capital requirements remains crucial. Continued investment and innovation are key to achieving sustainable energy goals and maintaining progress. The renewable energy-driven future presents both opportunities and challenges. There are lessons to be learned and solutions implemented that will serve as a blueprint for other nations embarking on a similar path toward a cleaner and more resilient energy landscape.

Shirish S Garud, Consultant and Ex-Director- TERI

“Developing countries, including India, face high capital costs for green energy due to new technologies and scale inefficiencies. International discussions have focused on climate funds and technology transfers.”

Sanjiv Prasad, Head – Power Utilities and ETP- RIL DMD

“As solar generation peaks, grid frequency can be impacted due to the slower response times of thermal power plants; smarter controls and real-time data integration are essential for maintaining grid stability.”

Sabyasachi Majumdar, Senior Director- CARE Ratings

“Thermal power, including coal and gas, will remain a part of the energy mix for the next 5 to 10 years; ramping up storage solutions like battery and pumped storage is important to smooth out fluctuations.”

Labanya Jena, Sustainable Finance Specialist- IEEFA

“Green bonds have been romanticised, but the reality is more nuanced. Issuers face additional costs for certification and due diligence. The green premium, once an attractive feature, has dwindled.”

Subrahmanyam KV, Sr. Vice President- Radiance Renewables

“Microgrids powered by a mix of solar, biomass, and biogas are transforming rural areas. They ensure that energy needs are met sustainably and locally.”