Renewables Rich Rajasthan can Lead India’s Energy Transition: IEEFA

Public sector enterprise Rajasthan State Mines and Minerals Limited (RSMML) has issued a tender for comprehensive operation and maintenance (O&M) of the 4.9 MW wind power project at Village Barabagh, District Jaisalmer in the state of Rajasthan.

IEEFA finds that Rajasthan can play a key leadership role in India’s transition to a low-emission and low-cost electricity system.

As India looks to expand its renewable energy capacity, a new report from IEEFA finds that Rajasthan can play a key leadership role in India’s transition to a low-cost, low-emission, profitable electricity system.

The state’s installed renewable energy capacity reached 9.6 gigawatts (GW) at the end of fiscal year (FY) 2019/20. It also added more solar power capacity (1.7 GW) in FY 2019/20 than any other Indian state, ahead of Karnataka (1.4 GW), the state with the highest installed solar capacity, and Tamil Nadu (1.3 GW).

“Rajasthan has a bright future as a renewable energy leader in India,” said the report’s author Kashish Shah, Research Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA). “But its power distribution companies (Discoms) are among the worst performing in India.”

Expensive coal-fired capacity tariffs coupled with huge aggregate technical and commercial (AT&C) losses led to the Rajasthan discoms booking a loss of Rs 6,355 crore in FY2019/20 after accounting for state government subsidies.

“A shift to cheaper renewable capacity could help alleviate the Discoms’ financial liquidity and cash flow issues,” said Shah.

The state has high solar radiation and wind speeds and an abundance of barren land that will make it suitable for utility-scale solar parks. A testament of which is that it is already home to the world’s largest solar park – the 2.25 GW Bhadla Solar Park, located in Jodhpur district.

“These factors make Rajasthan an attractive destination for domestic and foreign investors looking for opportunities in renewable energy, electricity grid infrastructure and associated manufacturing,” said Shah.

Currently, Rajasthan depends on electricity imported from other states given a power deficit during peak daytime hours. With an increase in renewable energy investment, the state could become a net exporter of electricity in the coming decade, according to the report.

“It makes sense for Rajasthan to export electricity to other states. Yet we estimate it imported 10.9 terawatt-hours (TWh) in FY2019/20,” said Shah. “The state government should be taking proactive measures to fully utilise Rajasthan’s renewable energy potential and build capacity to transmit power to states with energy deficits.

“Revenues from the interstate export of power would help sustainably grow GDP and improve India’s energy security and load balancing capacity.”

Today renewable energy sources form 43.5 percent of Rajasthan’s operational installed capacity and produce 17.6 percent of its total on-grid generation. Meanwhile, the state’s 9.8 GW of coal-fired capacity makes up 45 percent of total installed capacity and produces 56.5 percent of total on-grid generation.

But Rajasthan’s electricity sector could look very different by the end of this decade, IEEFA’s modelling suggests.

“We forecast that the composition of the electricity sector will shift dramatically, with renewables forming 74 percent of capacity and 63 percent of total generation by FY2029/30,” said Shah. “Our model forecasts a total of 22.6 GW of renewable energy to be added to Rajasthan’s grid. This will consist of 18 GW of new solar capacity, of which 3 GW is forecast to be distributed solar capacity.

“We estimate solar will supply 98 percent of the incremental electricity demand by FY2029/30; and that 4 GW of new onshore wind power capacity will serve 45 percent of the incremental demand.”

The analysis ends by stating that if Rajasthan fulfils its solar power potential, it could be one of the largest contributors to India’s target of 450 GW of renewable energy by 2030 – and provide a model for other states to follow.