In a significant development for the renewable energy sector, India is poised to add a whopping 45 gigawatts (GW) of fresh renewable energy capacity within the next two fiscal years, according to a recent report by CareEdge Ratings. This impressive projection underscores India’s commitment to reducing its reliance on fossil fuels and embracing cleaner energy sources.
The report attributes this positive outlook to several key factors, including a robust project pipeline and a well-defined bidding roadmap established by the Indian government. These elements have set the stage for rapid expansion in the renewable energy sector.
Steady Progress in Renewable Energy
India has been steadily progressing in its renewable energy endeavors, driven by a strong governmental push to combat climate change and reduce its carbon footprint. This push is in alignment with India’s National Electricity Plan (NEP), which envisions substantial capacity additions in the renewable energy segment.
The CareEdge Ratings report outlines India’s progress, with an anticipated installation of 20 GW of renewable energy capacity by the close of the fiscal year 2024. However, the growth doesn’t stop there. An additional 25 GW of renewable energy capacity will be added in fiscal year 2025. This concerted effort would result in a cumulative renewable energy capacity of 45 GW within a remarkably short two-year span.
Unlocking the Potential with Falling Module Prices
A pivotal driver behind India’s renewable energy growth is the declining cost of solar modules. The report highlights a noteworthy reduction in module pricing, with costs plummeting from 28-30 cents per watt to 21-22 cents per watt. This price decrease not only makes solar energy more accessible but also stimulates investments in renewable projects. Lower costs are enticing for the government and private investors, thus contributing to India’s transition to cleaner energy sources.
Forex Savings and Emphasis on Local Manufacturing
India’s efforts to boost local manufacturing of solar modules are gaining momentum, thanks to the Production Linked Initiative (PLI) scheme launched by the government, which has received an allocation of approximately Rs. 18,000 crore. The PLI scheme’s objective is to bolster domestic production of solar modules, thereby reducing India’s reliance on imports.
This shift toward local manufacturing is expected to yield significant foreign exchange (forex) savings. The CareEdge Ratings report estimates that the commissioning of domestic capacity will result in annual forex savings of approximately Rs. 90,000 crores, a substantial economic benefit.
The Commercial and Industrial Market
The CareEdge Ratings report highlights the promising growth prospects within the commercial and industrial (C&I) sector for renewable energy. By instituting transparent regulations and fostering private investments in this domain, there exists the potential to catalyze a transformative shift. The C&I market presents a substantial opportunity for the expansion of renewable energy, delivering heightened transparency, enhanced reliability, and the allure of additional private investments.
Energy Storage Challenges and Opportunities
Despite India’s promising renewable energy growth, challenges lie ahead, particularly in the realm of energy storage. The NEP sets ambitious goals for pumped storage projects and battery energy storage systems (BESS). However, realizing these objectives will require substantial capital expenditure, with estimates of up to Rs 1.6 lakh crore for pumped storage projects alone.
Securing the stability and reliability of India’s renewable energy grid is contingent on making strategic investments in energy storage infrastructure, a necessity heightened by the intermittency of renewable sources like solar and wind.
Promising Supportive Measures
Jatin Arya, Associate Director of CareEdge Ratings, expressed optimism about the growth of renewable energy in India. He noted that supportive measures such as energy storage, local manufacturing, and open access hold promise for the sector’s expansion.
The NEP, as released by the Central Electricity Authority (CEA), envisions an average annual capital expenditure (capex) of approximately Rs. 3 lakh crore for the next nine years, driven primarily by the renewable energy segment. However, Arya emphasized that uniform adaptation of open access rules across states and stable module prices are essential prerequisites for realizing the full potential of India’s renewable energy growth.
India’s commitment to renewable energy is set to drive substantial growth in the sector, making significant strides towards a greener and more sustainable energy future.
Source: Saur Energy International