510 GW RE by 2030: Where does India stand

As the Indian government expects that the country’s renewable energy capacity would touch 510 GW by 2030, where do we stand today?
India has shown tremendous progress in renewable energy (RE) sector. It has increased its RE installed capacity by more than 200 percent in last 5 years. The country targets to achieve 175 GW RE generation capacity by 2022, out of which 100 GW is planned to come from solar projects, which will comprise 60 GW from ground-mounted, grid-connected projects, and 40 GW from solar rooftop projects. Wind power projects are expected to contribute 60 GW, 10 GW from bio-power and the rest 5 GW from small hydropower. However, in September last year, Prime Minister Narendra Modi had announced increasing the renewable energy target to 450 GW by 2030 from 175 GW by 2022.

Of late, the country’s Power and New & Renewable Energy Minister R K Singh said that the RE capacity would touch 510 GW by 2030, including 60 GW of hydro power.

Commenting on the revised target of 510 GW RE by 2030 and where do we stand today, Shivanand Nimbargi, Managing Director and CEO, Ayana Renewable said, “We started with less than 1 GW of solar power capacity in 2010 and today we have approximately 34 GW of installed solar capacity. The target of 510 GW RE by 2030 is an aggressive target but it is achievable, and it will dramatically change India’s energy scenario.”

Ravindra Prabhudesai, Managing Director, Pitambari Products Pvt. Ltd. – Pitambari Solar Care Division observes: “As of December 2019, 86 GW of RE capacity has already been achieved. This includes 34 GW solar and 38 GW of wind energy. Besides, around 36 GW of clean energy is under installation and about 35 GW is under bidding stage. In the projected targets, more than 90 percent shall be government tenders and utility large-scale projects and remaining are small-scale rooftop as well as ground-mounted projects.”

Manoj Gupta, VP-Solar and Waste to Energy Business, Fortum India said, “Looking at the installation trend, there may be some shortfall in achieving 175 GW by 2022 but the long-term focus seems to be clear. According to a recent report by TERI, India can incorporate more than 30 percent of wind and solar power in its power system by 2030, while still retaining security of supply without increasing the total economic costs of its electricity system.”

He adds, “Battery storage would also help to decrease solar curtailment and ease the need for assertive daily cycling up and down of the coal fleet. MNRE is trying many business models to achieve long-term goals and I am sure that these new business models will definitely give fruits to the country and long-term goal of 510 GW will be achieved.”

However, Amit Anant Arokar, Managing Director, ECE (India) Energies Pvt Ltd believes we have a long way to go! He said, “RE development and solar manufacturing industry goes hand in hand. Indian government’s target of 510 GW till 2030 is achievable, only decision makers have to think more about local solar producers rather than giving window to import solar modules and equipment from China by waiving off duties for earlier allocated work. Solar manufacturers are ready to deal with all challenges for producing high-quality modules as per global standards to meet target.”

Out of the 510 GW target, wind energy is to contribute 140 GW. As of 31st July 2020, the operational installed wind energy capacity is 37.94 GW. That means, India has to install 102.06 GW of wind energy in 10 years i.e. about 10 GW per year. But in 2019-20, the country has added only 2.06 GW whereas it was 1.48 GW in 2018-19 and 1.87 GW in 2017-18. However, in 2016-17, India added a massive 5.5 GW of wind energy capacity. India thus has the capability to scale up and meet the challenge. At current prices, the investment required to install such a capacity would be to the tune of around Rs. 6.12 lakh crore per GW.

“Though the government has allowed 100 percent FDI in the RE sector under automatic route, the FDI received was only a fraction of the requirement, viz. Rs 11,053 crore in FY 2018-19 and Rs 9,700 crore in the first nine months of FY 2019-20,” opines Prof. Dr. K. Kasthurirangaian, Chairman, Indian Wind Power Association (IWPA).

Main bottlenecks for RE deployment in India
India has tremendous RE potential and is largely untapped. Recent estimates show that India’s solar potential is greater than 750 GW and its announced wind potential is 302 GW. India Energy Security Scenarios 2047 show a possibility of achieving a high of 410 GW of wind and 479 GW of solar PV by 2047. But there are hurdles too!

Experts believe that the major challenges impacting the growth of RE market are land, power evacuation and changes in taxes and duty structures like safeguard, BCD and GST for under implemented projects. The financial health of DISCOMs is another challenge which delaying the payment of electricity generated. “Land and evacuation challenge is delaying the commissioning of the plants and change in taxes and duties and payment delay by DISCOMs are drying out the equity from the market,” comments Gupta.

Poor finance infrastructure, lack of awareness, lack of experienced and skilled manpower, high initial capital cost, and negligence towards O&M are the major hurdles as per Prabhudesai. He adds, “We need smooth and easy government policies and approach of officials. Also, we need fast and smooth approvals from authorities.”

According to Arokar, “Government policies and taxation systems are the major hurdles in RE development. Also, dependency on other countries for basic raw materials is also one of the viscous factors in RE development.”

Talking about the main bottlenecks for wind energy deployment in India, IWPA’s Chairman Prof. Dr. Kasthurirangaian said, “The main bottleneck for wind energy deployment is the existing policy framework – both at the central and state levels.”

He adds, “SECI auctions for wind energy seem to concentrate only on Gujarat and Tamil Nadu – they leave out Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra and Rajasthan, which are also ‘windy’ states.”

Dr. Kasthurirangaian further points out: “Delayed payment to wind energy generators by cash-starved DISCOMs is yet another issue. This is being addressed through liquidity injection by the central government through government financing companies like REC, PFC etc., though it is only an ad-hoc solution.”

Nimbargi lists some of the major bottlenecks for RE deployment in India and explains how they can be overcome as:

Demand for RE: We have still more than 15-20 GW of projects which have been awarded yet to take off with PSA and necessary regulatory approvals for PPA and PSA.

Poor financial health of DISCOMs: Outstanding payments to generators are quite high. Urgent changes need to ensure that DISCOMs are run on the basis of financial sustainability.

Settlement and payments on account of change in law: Standard procedure should be laid and list of projects eligible should be provided by MNRE rather than each and every project going through regulatory filing. This will help getting capital being available for deployment for new projects.

Land: Uniform rules across different states for RE projects will help in timely implementation.

Transmission and Distribution: Planning and implementation should be based on RE capacity addition plan. Also mixing and storage to be enforced for grid stability.

Clarity on policy and regulatory framework: Time taken for regulatory approvals is quite high, needs to be streamlined. In addition, tax and duty structures to be notified and be applicable post notification and for new bids. Projects awarded and in execution should be exempted.

Financing: RE sector should get priority lending status and financial institutions to pass on the rate reductions by RBI.

Industry urges govt to implement 50% BCD immediately

Apex solar industry body All India Solar Industries Association (AISIA) recently urged the government to immediately impose at least 50 per cent BCD (basic custom duty) on solar equipment for sustenance of domestic manufacturers.

“AISIA urges the government of India for immediate implementation of BCD for sustenance,” AISIA said. The association in a statement said that following the COVID-19-related disruption, the Indian solar manufacturing sector has witnessed a major downfall with exports coming down.

“While Safeguard Duty and the recent decision by the Govt. to provide land near ports to set up manufacturing units has been a step in the right direction, solar manufacturers are imploring for an immediate respite. It is imperative for the Government to revisit existing policies to optimise capability of the domestic players who have been at the receiving end of the perils of the pandemic,” the statement adds.

“The survival of the manufacturers requires the government to look into restructuring of existing policies like implementation of at least 50 percent BCD, ALMM (Approved List of Models and Manufacturers); without which the future of the domestic solar module manufacturers seem bleak and dwindling,” said Dr Hitesh Doshi, Chairman, AISIA.

He adds, “The country’s dependency on China for solar imports in FY20, was recorded at imports worth $1.3 billion. This shows the potential the sector holds for the domestic manufacturers to contribute to the GDP, should the focus be shifted towards enabling the domestic players. Additionally, weaning off dependency on China and other international markets will also save foreign exchange.”

Also, according to AISIA, provision for pass through or grandfathering for imports of modules does not give options to buy solar modules from local manufacturers. “So far more than 32,000 MW PPA are allotted for which approx 45000 MW modules will be imported in next three years if the same benefits are given to local manufacturers we will not save thousands of jobs but huge foreign exchange also. Developers will have the option to buy from India and Indian manufacturers will survive,” AISIA said.

India amends public procurement rules – its impact on RE projects

With the aim of imposing further restrictions on public procurement from China, the Indian government has recently amended its procurement rules. Arokar termed this decision as a ‘good move’ to protect interest of local entrepreneurs. He said, “Restriction will definitely bring a wave of energy in Indian EPC and system integrator (business).”

Nimbargi said, “MNRE in the interaction with industry body has intimated that ALMM (Approved Lists of Models & Manufacturers) order will be applicable (for projects) post announcement. Projects awarded and currently in execution should not be impacted.”

Prabhudesai acknowledges: “India restricts Chinese companies while private sector has been exempted from any such restriction. Most of the key components like solar modules, solar inventers and connectors are manufactured or assembled in China, and are available at very low rate. Domestic market or suppliers can’t match that pricing. Hence definitely it affects on costing and procurement cost of solar projects. To overcome these, domestic players have to manufacture or supply quality materials on competitive rates.”

However, according to Gupta, “Indian government’s restriction from Chinese companies participating in public procurement bids may have very minor impact on RE sector as their direct participation in public procurement is almost nil.” He adds, “There are many long-term sustainable IPP players in the market who will take forward RE sector to the new height. Few big Indian corporate have also started participated in some of the recent bids and few have announced their future foray into this sector in a big way.”

Looking at the installation trend, there may be some shortfall in achieving 175 GW by 2022 but the long-term focus seems to be clear.
Manoj Gupta, VP-Solar & Waste to Energy Business, Fortum India

The target of 510 GW RE by 2030 is an aggressive target but it is achievable, and it will dramatically change India’s energy scenario.
Shivanand Nimbargi, MD & CEO, Ayana Renewable

SECI auctions for wind energy seem to concentrate only on Gujarat and Tamil Nadu – they leave out Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra and Rajasthan, which are also ‘windy’ states.
Prof. Dr. K. Kasthurirangaian, Chairman, Indian Wind Power Association (IWPA)

We need smooth and easy government policies and approach of officials. Also, we need fast and smooth approvals from authorities.
Ravindra Prabhudesai, Managing Director, Pitambari Products Pvt. Ltd.

Solar manufacturers are ready to deal with all challenges for producing high-quality modules as per global standards to meet target.
Amit Anant Arokar, Managing Director, ECE (India) Energies