Karnataka & Gujarat Lead in Clean Energy Transition; Odisha, Bihar, UP Laggards

A new study conducted in unison by IEEFA (Institute for Energy Economics and Financial Analysis) and Ember to create the States’ Electricity Transition (SET) Scoring System. The report takes a look at 16 states in India. The report has analyses 16 Indian states that make up 90% of the country’s yearly power needs. The states have been evaluated on electricity transition, further divided into 16 different parameters.

The dimensions analyse a state’s readiness for making the transition to clean energy, potential to incentivise greener market participation, reliability of its power system and policies that push for the decarbonisation for power sector. The report finds that states rich in renewable energy are not exploiting their potential for renewable energy generation.

Clean Energy Transition 

The report finds that the states of Karnataka and Gujarat are making strides when it comes to readiness for and dedication to making the transition to clean energy.

The report states that Bihar, Uttar Pradesh and West Bengal must accelerate initiatives to optimise renewable energy
generation potential and increase clean electricity transition commitments. On the other hand, Rajasthan and Tamil Nadu, have begun their clean electricity transition programme, their progress is not uniform across all areas.

“India’s revised Nationally Determined Contribution (NDC) targets have put the country on the right path for transitioning its electricity sector. To achieve those targets, the centre now needs the cooperation of the states to move faster in their clean electricity transitions. This means states redoubling their efforts to walk the electricity transition pathway, and both central and state governments tracking progress and taking corrective measures as required,” says the report’s co-author Vibhuti Garg, Director, South Asia, IEEFA.

“Bihar, Uttar Pradesh and West Bengal have work to do to strengthen their clean electricity transition performances. These three states should maximise their renewable energy generation potential, and at the same time increase their commitment to moving away from fossil-fuels-based electricity,” says co-author Saloni Sachdeva Michael, Energy Analyst, IEEFA.

“Even the long-considered front-runners of adding renewable energy capacity, Rajasthan and Tamil Nadu, have to improve the readiness of their power ecosystems for a clean electricity transition,” says co-author Aditya Lolla, Senior Electricity Policy Analyst, Ember.

RPO Targets

Karnataka has been overachieving its Renewable Purchase Obligations (RPO) targets, followed by Rajasthan. The state’s renewables supply 29% of the state’s power mix. In March 2022, Rajasthan became the state with the largest installed capacity of renewable energy.

Policy

Progressive policies in Rajasthan like the Rajasthan Wind Solar Hybrid Policy 2019 and Rajasthan Electric Vehicle Policy 2022 have helped accelerate the capacity addition. The state targets installing 3.5GW of hybrid projects by FY2024-25. Of this, the hybridisation of existing wind or solar projects will account for 200 megawatts (MW), new wind-solar hybrid projects will account for 2GW, wind-solar hybrid with storage systems will account for 500 MW, and hybridisation of existing conventional projects will account for 800 MW.

To enhance DISCOM viability, Rajasthan’s wind-solar hybrid policy allows DISCOMs to procure power up to 5% of their RPO target from hybrid projects with storage systems at a tariff discovered through competitive bidding.

Gujarat and Karnataka are the other two states that performed well in this dimension. Both states have announced that they will not build new coal power plants36 and do not have any coal power plants currently under construction. Gujarat has about 0.85GW of new coal power projects in the pre-construction stages, and Karnataka has about 1.6 GW. While much of this pipeline in Gujarat is a state-sector undertaking to expand the Ukai thermal power plant, in Karnataka, it is a private-sector undertaking to develop the Udupi power station. Local activists have strongly opposed the expansion
of the Udupi power station. Thus, Karnataka scored slightly higher than Gujarat, while both states had high scores compared to other states.

Energy Storage Solutions

The study suggests deploying more energy storage solutions, such as batteries and pumped hydro, for better renewable energy integration.

When it comes to making progress on battery storage capacity, Gujarat is a winner, faring better than Karnataka. It has been moving early on pilot projects related to battery storage capacity. Gujarat Power Corporation Limited (GPCL) has commissioned 15 megawatt-hours (MWh) of Solar + Battery Energy Storage System (BESS) system, while Gujarat Urja
Vikas Nigam Limited (GUVNL) has issued a request for selection (RfS) for two projects adding up to 1,250 MWh. Gujarat State Electricity Corporation Limited (GSECL) has also issued an RfS for a Solar + BESS system of 57MWh. The state currently has the most battery storage projects in the pipeline with these projects. It has been a close call between Gujarat and Karnataka, though.

The Laggards

Odisha scored low in almost all the parameters. As per GEM data, it has 60 MW of coal power capacity under construction and 6.2 GW of coal power capacity in the pre-construction stages. The proposed new coal power plants include central, state, and private ventures. As such, this state scored the lowest in avoiding new coal power lock-in. Although it recently cleared a project to build a 600 MW pumped storage plant, Odisha also has no battery storage projects in the pipeline. As a result, it had the lowest score even on this parameter. Odisha has low per capita e-waste and battery recycling capacity (0.12 kg per capita in a year).

West Bengal and Andhra Pradesh- both states do not have any grid-scale battery storage plants in the pipeline, West Bengal’s and Andhra Pradesh’s per-capita e-waste and battery recycling capacities at 1.36 and 3 kg per capita in a year, respectively, were among the lowest in the country.

Other observations

Apart from ramping up renewable energy capacity and storage, the report recommends that states take a multi-dimensional approach towards the clean electricity transition, which includes efforts on the demand side. With more renewable energy coming online, the report also recommends states focus more on strengthening their power systems.

“State energy departments also need to strengthen electricity infrastructure for better integration of renewables. In addition to managing the demand and supply of electricity, ensuring effective utilisation, monitoring, and tracking of electrons is also very important,” he adds.

Further, according to Lolla, introducing private sector participation and competition would bring more capital and management expertise into the electricity sector. This will help enhance operational efficiency and increase accessibility and affordability.

The report highlights increasing states’ participation in green market mechanisms as a key element to the clean electricity transition.

“We found limited participation of states in green market mechanisms like the Green Day Ahead Market (GDAM), Green Term Ahead Market (GTAM) and more,” says Sachdeva Michael.

“Developing a more robust market is an opportunity to support states with low renewable energy potential. To achieve this, states need to take urgent actions like removing banking restrictions and allowing banking of renewable energy not just monthly but also quarterly and yearly, especially for wind generation,” she adds.

The report also highlights that innovative bilateral financial markets mechanisms like Virtual Power Purchase Agreements (VPPA) and Contracts for Difference (CfD) have huge potential to open up the market and give buyers and regulators the required assurance on handling intermittent renewable energy generation.

Another key aspect where states can do better is data availability and transparency. To monitor progress effectively and course-correct when necessary, the report calls for data availability and transparency improvement.

The report finds that the states need to develop a more holistic and circular approach towards handling solar panel, battery and electric vehicle waste. This will become even more crucial as India sets up new manufacturing units under the ‘Atmanirbhar Bharat’ (self-reliant India) scheme.

Finally, the report highlights that several states must also bridge the gap between the intent of their electricity transition policies and their implementation.

The Indian States’ Electricity Transition can be accessed here.