India At 75 And Beyond. Solar’s Starring Role

India’s Climate Pledges

Prime Minister Narendra Modi’s pledge at the COP26 Climate Summit at Glasgow, not only laid down the roadmap for India to scale up contribution of renewable energy in the overall energy blend, it also set the ball rolling for exploring a new industrial model.

India, which is the third largest emitter of carbon dioxide – the most common greenhouse gas responsible for global warming – announced a target of 2070 for ‘net zero emission’. PM Modi also announced that by 2030, India will: Take the energy capacity through non-fossil fuels to 500 GW; Fulfil 50% of its energy requirement from renewable sources; Cut down its net projected carbon emissions by one billion tons; And finally, bring down carbon intensity of its economy by more than 45 % over 2005 levels.

These ambitious goals demonstrate the high belief in the government for not just the need, but also the means it hopes to have to achieve these numbers. In doing so, it has sent a very strong signal to the rest of the world on the role it will play as a climate leader.

Will we be able to walk the talk? We dive down to take a closer look at India’s energy infrastructure, especially Solar, which is set to play a decisive role in this push. Can India support the promises made at the global stage in Glasgow? And just where will we find ourselves in 2022, as the nation celebrates it’s 75th anniversary?

Power for All- A reality in India@75

An IEA report, ‘India Energy Outlook 2021’ had pointed out that India is expected to see the largest increase in energy demand compared to any other country, over the next 20 years. Undisputedly, as a country with a vast population of over 1.3 billion, and a rapidly growing economy, India’s appetite for energy is only going to surge further, as it pushes to pull close to 400 million citizens above the poverty line and provide them quality energy access. Even as higher energy consumption spreads across other segments with economic growth.

The relevance of targets announced at Glasgow become even more significant in this context of expected rise in energy demand. What makes the energy debate even more exciting, is the fact that India is yet to achieve 100% electrification and 24/7 supply. Experts see this both as a challenge and as an opportunity.

Challenge because, at one level India is already wrestling with multiple issues –under development, price rise, poverty, unemployment, overpopulation amongst others – that are a cause of concern. In the wake of Covid pandemic, poverty and inequality have only become uglier. In this context, we need to take the whole energy debate right on to the centre stage for it to deliver a successful performance. By taking it as a fundamental right, that will help achieve and improve other key development indicators.

Darshan Pandya, Managing Director of Fox ESS feels, “Progressive changes we are witnessing in recent years signal a positive and optimistic future for the industry.” Industry players like him see this as the best time for striking a positive change, as India already is being looked up as country with a “vision for going the green way”. That means strong support from development institutions worldwide, based on the established market mechanisms here, as well as a strong track record of external repayments.

Omkar N Pandey, Chief Growth Officer at Sanvaru Technologies, a Battery Startup says,” We are optimistic and positive that power can be provided for all by 2023, and we hope to achieve the 24/7 power for all by the year 2027.” However, he asserts that it is important to – push the segments of rooftop Solar PV, DRE/DER and BESS, and also a commit towards achieving the last mile delivery of energy services.”

Manish Narula, Head of Business Development and Senior Director, Sales at Jinko India is confident as he says, “There cannot be a better time than the present to reach ‘self[1]sufficiency’ in the solar value chain.” With conviction to address policy gaps from government, we can actually become a ‘leader’ from being a ‘follower’ at the moment, he adds. He should know, as Jinko is not only one of the leading module suppliers to the world, but has ranked among the top two Chinese module suppliers to India too in the past 2 years.

While most industry leaders are confident that India will achieve power for all, 24/7 by 2023, Rajni Bhandari, Head of Marketing at Amp Energy India feels that the target of creating 300 GW plus of solar capacity between this year and 2030, is achievable only if there is “right push and policy environment”. She clarifies that the focus needs to be on capacity addition and project execution. Bhandari also says, “The government needs to ensure that all bids out/tied up capacity comes through the online channel.” Her message is clear. Clear out the logjams preventing faster adoption by the Corporate and Industrial (C&I)segment, and make policy more consistent across states, especially on issues like open access.

When we did a simple survey across all our social media handles, besides asking our experts here, the final results based on over 400 responses would be described as fairly optimistic.

Which one of these objectives do you believe will the country meet by 2023?

a) Power for all.          41%

b) 24/7 power for all   18%

c) Both of the above.  37%

d) None of the above  4%

Policy will be a decisive factor in the green energy sector. The total energy generation from renewable sources as against the whole pie, as per the government data(below) is only about nine percent (upto Dec 2020), whereas the share of total RE installed capacity is about 25%. With large Hydro, it is already close to 40%, one of the key Paris goals for 2030. However, India’s fresh commitments on share of generation instead of capacity changes the game significantly. The fact that 70% of India’s electricity grid is still powered by coal, is just the start. As a matter of fact, a clarity on how we seek to achieve a reduction in the coal component in the overall energy game, is required going forward.

The Climate Action Tracker has pointed out that the country needs to phase out coal power generation before 2040, and boost its target for energy derived from non-fossil fuels. That is something the government hasn’t even accepted, far from signing up for.

FIGURE 1: INDIA’S RE SECTOR AT A GLANCE. SOURCE: MNRE

On the other hand, the government data also reflects that the electricity generation from conventional sources in the country has increased from 420.6 Billion Unit (BU) during 1997-98 to 905.9 BU during the year 2020-21 (upto December 2020). The overall electricity generation through the renewable energy has risen from 3.4 BU in 2003-04 to a significant 111.9 BU 2020-21 (upto December 2020).

Thus, while there has been consistent and rapid growth in the contribution of renewable sources in the total energy mix, can we completely reverse this in favour of renewable sources in the next nine years to be able to achieve our 2030 target? That is truly the trillion dollar question.

Key initiatives in India’s RE journey

India Energy Outlook 2021 points out that these transformations, apart from demanding strong policy reforms and push require huge advances in innovation, strong partnerships and vast amounts of capital.

Industry leaders are optimistic, that India in its 75th year of independence will see a ‘brighter’ future and a clear pathway to achieve these, as the government has provided a clear mandate on actionable areas for increasing the contribution of renewables. Industry experts do question viability issues on account of the increasing gap between total revenue and total expenditure.

Generation Share

Darshan Pandya, MD, Fox ESS on the viability issue of Discoms sums up, “The gap is widening due to the hike in fuel prices, increasing power purchase costs, high transmission and distribution losses, significant consumption by the subsidised category of consumers, inadequate investments in the distribution segment, high operation and maintenance costs.”

Programmes like the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Pradhan Mantri Sahaj Bijli Har Ghar Yojana – (Saubhagya of October 2017), aim to achieve universal household electrification by providing last mile connectivity and electricity connections to all remaining un-electrified households. From having a massive power deficit of -16.6% in 2007-08, India through a multi-pronged, comprehensive and aggressive intervention from the government, has almost been able to wipe this out.

As per the government data, it has consistently gone down over the last 3 years: -.4% In 2020-21, -(.7%) in 2019-20 and -(.8%) in 2018-19. The current year, up till October, it has been -1.2%; the marginal spike being attributable to the annual post monsoon pressure on power output. Industry feels that the intent to deliver is clearly visible.

Talking of government schemes that target last mile delivery and domestic manufacturing, Bharat Bhut, Cofounder and Director of Goldi Solar points out, “The Production Linked Incentive (PLI) Scheme is a good initiative at a macro level because it will create a polysilicon to module ecosystem in India. New players and very big players will invest thousands of crores which will benefit the industry and the nation.”

However, he also expresses concern in the current scenario where the a significant part of the solar industry is managed, owned and run by MSMEs and mid-size companies. Expressing pessimism about their prospects, they will find it difficult to survive in the years to come, he said. If that fate is to be avoided, then policy makers need to move now to encourage MSMEs both upstream and downstream to build the ecosystem.

Omkar Pandey says, “The installation of 100 GW of renewable energy capacity is a significant step forward in India’s commitment at the Paris Agreement to address the climate change.”

As per the official numbers India has already achieved 47 GW of solar capacity as on September 30, 2021. Vineet Mittal, Director, Navitas Green Solutions Pvt. Ltd. says, “As per the trend of solar installations in India, in 2016 the total installed capacity of solar was 6.7 GW, which almost increased by six times in 2021. From 40 GW installed capacity already in 2021, to 450 GW in 2030, would be a jump by 11 times of the total installed capacity.” He feels, as the world is quickly changing, it is possible to achieve the goal before 2030.” After all, as India has highlighted, it has grown its solar capacity 17 fold, if one goes back to 2014.

Industry players point out India with its total installed capacity of about 390 GW, has many factors that work in its favour. Most important is the fact that the country is blessed with favourable environmental circumstances such as an abundance of sunshine which is on average twice the amount southern Europe receives .

Reflecting on the positives for India, Krishan Kumar Sharma, VP -APAC, ReneSola is confident that government’s campaigns like “Make in India” will be successful and India will be self-sufficient by the end of 2030. He says with certainty that India will be in a position to play an effective role, globally, in the field of clean energy.

Industry players appreciate the Make in India plan, which they feel has been rolled out well in the solar industry. As a part of the same, the PLI scheme of central government is expected to attract a huge investment base.

Vineet Mittal says, “It is already working well for the solar modules market.” Government has recently imposed 20% Basic Customs Duty (BCD) on solar inverter imports to encourage local manufacturers as well as to push the initiative of “AatmaNirbhar Bharat”.

Mittal expects that government to introduce PLI scheme for inverters as well, as he feels it can be a game changing decision for inverter market.

Industry players have also welcomed the new rules and deregulation in the power distribution, which will they feel will open up the growth for solar market.

Vineet Mittal feels, “Open access in renewables may play a key role and take the solar market to a new level. A huge need of solar rooftop installation is predicted among the residential, commercial and industrial customers.”

Here, Bharat Bhut points out that there is a need for better alignment in this context between the central and the state government. “More alignment and a single policy across the country would result in stability.” He adds that all state governments must remove the cap on net metering. “Retraction of signed contracts by DISCOMs is also a significant pain point.”

If addressed well, the new rules and deregulation in power distribution will certainly open up growth for the solar rooftop market, he asserts.

The way forward

When we talk of scaling up power generation through renewable sources in India, industry players count capacity creation and capacity installation as challenges that we have to confront as we set out to meet the target of 450 GW. Capacity installation of 25 GW per year would mean, that in addition to a regular flow of solar tenders, similar support is also needed towards grid enhancement, DISCOM’s purchase power, land and other infrastructure development, which could be done through Solar Park model as far as Govt support is concerned.

Staying competitive and running solar plants with sufficient margins on long term basis is an important issue government needs to take care of. The big factors that will play a critical role to boost the surge specifically in solar rooftop will come through more accessible financing options and corporates that are eager to switch to 100% renewable energy to meet their RE100 commitments.

As per Global Trends in Renewable Energy Investment 2020 report, during the period 2014-2019, renewable energy programmes and projects in India attracted an investment of US$ 64.2 billion (Rs 4.7 lakh crore). Effectively, we need to not just sustain, but grow these numbers 6-7 times to meet our new targets! While initiatives like PLI seem like an initiative in the right direction to make India self-reliant and a globally competitive manufacturing hub, much more will need to fall into place to make a fist of it.

Key Projects like the PM KUSUM scheme are expected to help us get closer to the target of 450 GW, but industry players feel that we need to work harder to bridge the gap between KUSUM and last mile delivery of Energy services, Water and Food Security, Rooftop solar. Solar will play a vital role in DER for C & I and residential Solar PV and large Utility will be the need of hour for early decarbonisation and to achieve the Low carbon economy.  This is also where the opportunity to offer support to smaller parts of the solar ecosystem come into play, besides massive job creation opportunities.

Solar manufacturing capacity is expected to push over 40 GW by 2023-24, which will churn out close to 28-30GW of production output in time. That gives India not just enough for its own consumption, but also space to target export markets by aiming for top quality. The challenge will be to find a balance between protection for domestic manufacturing and higher costs of power, if the balance is askew. A strong R&D focus and partnerships with other global manufacturers looking at this market will matter. First Solar is one example of a global Module player willing and planning to invest in a 3 GW set up here, including backward integration.

Besides these issues of capacity creation and installation, energy storage is another area where government needs to work on. Industry feels confident that grid-scale battery storage will play a crucial role in enabling the next phase of the energy transition pointing to an accelerated deployment of assets. According to IHS Markit while lithium-ion battery cell prices have fallen to $90-140 per kWh, they are expected to further fall to $73 per kWh by 2030. This will help reduce the dependency on DISCOMS.

With a PLI scheme for battery storage on its way, and an increasingly supportive environment also coming up, there seems to be a very high chance that very soon, solar – storage will be mentioned in the same breath by more and more users.