India can halve electricity costs and achieve net-zero before 2050

The report shows that by 2050, thermal balancing power plants will have a relatively small, but crucial, back-up role, providing 1.1 percent of electricity generation.

India can cut its overall cost of electricity in half and reach net zero before 2050 by developing a 100 percent renewable energy power system, according to modelling by global technology company Wartsila and the Finnish Lappeenranta-Lahti University of Technology.

The modelling shows a clear, actionable pathway to achieve a net-zero electricity system that can bring enormous environmental and economic benefits to India, who is one of the world’s largest and fastest growing economies:

• Increasing renewable energy from 25 percent today to 100 percent before 2050 cuts the cost of India’s electricity by 48 percent; from US$88 megawatt hour in 2020, to US$46 in 2050.
• A flexible 100 percent renewable system provides large levels of excess power that can address India’s increasing energy dependency forecast to double by 2030.
• Increasing renewable energy could also generate major new revenues from hydrogen production, creating a technology market worth US$ 39.8 billion.

The modelling makes a clear case for immediate action to accelerate the development of a 100 percent renewable energy system in India. By combining variable renewable power with energy storage and thermal balancing, power plants will be capable of using carbon neutral sustainable fuels in the coming decade. With this, India can dramatically cut its carbon emissions and halve the overall cost of its electricity.

Sandeep Sarin, Market Development Manager, Wartsila Energy – India, and co-author of the report, said “This year, India will become the world’s fastest growing economy. Our modelling shows a path to a clean power system that will catalyse India’s transformation into a global clean energy powerhouse; lifting millions from poverty, creating new jobs, insulating the system from energy shocks and simultaneously playing a vital role in limiting global temperature rises to below 1.5°C. India has a mountain to climb in reconfiguring its energy system for net-zero, but it’s certainly possible with technologies that are already available at scale. With the right vision and planning, India can leapfrog developed nations into a sustainable future, but we must get into action before it’s too late.”

Wartsila’s ‘Front-loading Net-Zero’ report sets out clear steps for India to decarbonise its power system:

• Set ambitious clean energy targets over longer-term time horizons to attract investors.
• Increase climate regulation for companies, including mandating consumers and power producers to meet a certain percentage of their requirements from renewable sources.
• Strengthen flexibility solutions, such as thermal balancing power plants and battery storage that can raise the share of renewable.
• Launch an incentive programme for production of electrolysers (as capital costs are responsible for 30 percent of the cost of green hydrogen) and create new demand centres equipped to cost-effectively develop and transport green hydrogen

As well as showing a path to an affordable clean energy transformation, the modelling also demonstrates the major planning challenge to cleanly meet energy demand as India’s population rises to around 1.7 billion by 2050.

Power demand is estimated to increase by 340 percent by 2050 – from 1,345 TWh in 2020 to 5,921 TWh in 2050, with 1,023 GW of peak demand. The modelling confirms India can affordably meet this demand through renewable energy, aided by solar energy prices that are amongst the lowest in the world, averaging around $26 USD per MWh.

However, to serve this increased load through mid-day peaks and to charge energy storage resources such as batteries to offset intermittent renewable energy generation, the total system capacity must be scaled up to an unprecedented degree:

• 4,000 GW of installed capacity is needed for a 100 percent renewable system, a 10-fold increase on 2020.
• New solar installations must rise by 885 percent, from 7 GW a year today, to 69 GW a year by 2035, rising to 79 GW a year between 2035 and 2050.
• Solar would make up 76 percent (3,076 GW) of total capacity by 2050.
• This would also be supported by a total wind capacity of around 410 GW by 2050, combined with hydro and carbon neutral gas.

Wartsila’s modelling shows that flexibility through energy storage is key to achieve the cost-optimal renewable base load system – to shift generation when it is surplus, during the day, to times when renewable are not available, during evening or night-time. Thermal balancing power plants, backed by battery energy storage must also be deployed to manage sudden surges in demand or drops in renewable generation.

To support a 100 percent renewable energy system in India we need –

• Energy storage capacity must increase from almost zero to reach 99 TWh of storage capacity by 2050.
• Storage output should cover 35 percent of India’s total demand by 2050, with 99 percent enabled by batteries.
• 187 GW of fast-start load-following gas engines are needed to provide rapid grid balancing.

The report provides a wake-up call to leaders on the need for a comprehensive energy transition plan, underpinned by a long-term plan to deploy massively increased amounts of renewables, phase out coal, and dramatically scale up energy storage and flexible power system solutions.

Anish De, Partner, Global Sector Head, Power & Utilities, KPMG National Head – Energy Natural Resources & Chemicals, KPMG in India, said, “India’s ambition and achievements on renewable are of an unparalleled scale. We have abundant resources for cheap and clean renewable energy blessed with more than 300 sunny days a year; and our geography provides world-leading wind power. With some inventiveness, the right mix of new renewable generation and flexibility can replace coal and gas-fired power, creating a clean and more affordable system. This leaves a key question: is India better off committing itself wholeheartedly to a renewable energy future? From every angle, the answer is yes.” 

Wartsila’s report also lays out the shifting role of gas power in India. The modelling shows that by 2050, thermal balancing power plants will have a relatively small, but crucial, back-up role, providing 1.1 percent of electricity generation. Thermal balancing power plants will play a crucial role in decarbonising the power system by shifting to carbon neutral, hydrogen-based sustainable fuels, such as synthetic methane, to generate electricity and help decarbonise the final 10 percent of India’s energy system. Wartsila engines are already capable of running on 25 percent hydrogen blends and the company expects to be capable of running 100 percent hydrogen by 2025.

Håkan Agnevall, CEO and President of Wartsila, said, “Our modelling shows that it is viable for all energy systems to be fully decarbonised before 2050, and that accelerating the shift to renewable base load, coupled with flexibility, will help economies to thrive. We have all of the technologies that we need to rapidly shift to net zero energy. The benefits of renewable-led systems are cumulative and self-reinforcing – the more we have, the greater the benefits – so it is vital that leaders and power producers come together now to front-load net zero this decade.”

About the ‘Front-loading Net Zero’ report

Wartsila’s report models pathways to net zero power sectors in three key regions that are critical to the upcoming COP26 negotiations – Germany, India and California.

As well as the deep dive modelling on these power systems, the report also features key insights from Wartsila modelling in other countries, including Australia, Chile and the UK.

Across these vastly different energy systems, the modelling shows that by deploying flexible capacity, from energy storage and thermal balancing power plants, countries can ‘level-up’ renewable to fulfil a base load role.

Critically, these decarbonisation pathways do not increase the cost of electricity and can in fact cut costs, in comparison to today.

The report reveals that despite differing starting points, countries and sub-states have all the technologies that they need to rapidly shift to net zero energy systems.

The findings from the report will be presented by Sushil Purohit, President of Wartsila Energy, at the Economist Sustainability Week: Countdown to COP on Wednesday 6th October.

About the Modelling

The modelling defined a cost-optimal energy system structure and operation mode for a given set of constraints in each region: power demand; available generation and storage and balancing technologies; financial and technical assumptions; and limits on installed capacity for all applied technologies.

The model is based on linear optimisation and performed on an hourly resolution for entire years. The costs of the entire system are calculated as the sum of the annualised capital expenditures including the cost of capital, operational expenditures (including ramping costs), fuel costs and the cost of GHG emissions for all available technologies.

For further details, and to access the report Methodology, visit, www.wartsila.com/media/news-releases