YoY Increase of 36% in Annual Solar Capacity Additions Needed to Meet NEP14’s FY ’27 Goal

YoY Increase in Annual Solar Capacity Additions by 36% Needed to Meet NEP14’s FY 2027 Goal

EMBER India- an independent energy think tank, has released a report on solar adoption in Indian states. The report findings are as follows 

NEP Targets

The report indicates the need for states to increase their annual capacity addition by around 36% every year to meet NEP target for solar. The NEP14 outlines specific targets of achieving 185.6 GW of solar capacity by FY 2026-27, reaching 364.6 GW by FY2031-32.

There is a need for year-on-year increase in annual solar capacity additions by 36% required to meet NEP14’s FY 2027 target of 186 GW. This is on top of the record 12.9 GW of solar capacity addition that India commissioned in FY 2023, bringing the total national capacity to 66.7 GW.

The report adds that the recent government announcement regarding plans to invite bids for 50 GW of renewable energy capacity per year over the next five years could signal a strong commitment to achieving the NEP14 targets.

The report shows progress in achieving the NEP targets. It mentions that the recent investments in India’s renewable energy sector have increased by approximately 30% in 2023, as measured against the figures from Q1 and Q2 in 2022. 

The Growth Phase

The report says that as solar transitioned from the formative phase to the growth phase, its share increased five fold from FY 2017 to constitute 5% of India’s power generation mix in FY 2022. In FY 2023, solar’s contribution to the electricity mix saw a significant increase, rising by a maximum of 1.3% from 5% in FY 2022 to reach 6.3%, marking the highest recorded increase thus far.

Solar Share in Power Mix

If the NEP14 targets are met, solar adoption is expected to enter a phase of “accelerating growth,” with solar’s share in the power mix rapidly increasing from 6.3% in FY 2023 to 25% in FY 2032. This signifies an acceleration in the adoption of solar generation. Should these targets be achieved, India could experience an average annual growth rate in solar’s contribution to the electricity mix of over 2%, with peak rates of change reaching approximately 3% in the time period between FY2023 and FY2032.

Challenges & Opportunities

The findings highlight that, to fully harness the growing significance of solar energy, India should focus on enhancing power system flexibility by utilising various options on the generation, transmission and demand side. The report mentions that, for the ingeneration efforts should be made to improve the flexibility of existing coal plants. The EMBER report highlights that, given India’s requirement for increased firm peak generation capacity, the potential of peaker power plants should be further investigated. The report adds that to incentivize flexibility adoption, it is crucial to establish effective remuneration mechanisms capable of offsetting the additional costs associated with low plant load factor.

The report suggests that on the transmission side, better use of existing transmission capacity, and building new capacity is crucial for generation and demand balancing across space and at various timescales. The report shares details on a promising development in this context that occurred in December 2022, when the India Ministry of Power (MoP) introduced a comprehensive plan to reinforce transmission and evacuation infrastructure. The study sheds light on the demand response by utilising Time of Day (ToD) pricing which can serve as an effective strategy to incentivize consumption during off-peak periods or times of abundant solar generation throughout India. The study elaborates that, the Time-of- Day pricing can also play a crucial role in incentivising investments in storage capacity.

The report adds that integrating mechanisms like Time of Day may require complementary market approaches, such as the proposed Market Based Economic Dispatch. The report elaborates that such mechanisms are expected to reduce the cost of grid integration by enabling a wider area of coordinated scheduling and dispatch. Explaining the current self-scheduling mechanism in India, which involves scheduling based on the generation and storage capacity within the distribution utilities’ PPA portfolio. This the report mentions can lead to limited utilisation of thermal generators and storage flexibility. The study mentions that it would enable a market based mechanism, there is an urgent need for India to tackle several issues, especially those related to cost recovery of distribution utilities.