Building on India’s clean energy foundations07 Nov 2016
India’s clean energy plans make it one of the world’s most exciting markets for developers
India is already one of the world’s leading users renewable energy, and it has plans to significantly increase its capacity over the coming six years.
Today, the country has about 44GW of grid-connected renewable energy, comprising 26.9GW of wind, 6.8GW of solar and the rest coming from a mix of energy sources including small hydro-electric, biomass and waste-to-energy. It also has about 1.2GW of off-grid electricity, about half of which comes from biomass cogeneration.
By 2022, India has set a target of having an installed capacity of 100GW of solar energy, 60GW of wind, plus 15GW coming from other renewables. The country also plans on having 14.6GW of nuclear by 2024, and 63GW by 2032, supplying a quarter of the country’s electricity needs by 2050. In total, India's strategy calls for almost 240GW of clean energy across a raft of technologies, and that excludes hydro-electric.
The country's need for additional capacity is obvious. It has more than 1.3 billion people and the population has been growing at a rate of about 1.2% annually in recent years. By 2050, it is projected that 1.7 billion people will live in India. BP estimates in its latest Energy Outlook report that India’s energy consumption is growing at a rate of 4.2% per annum. This is faster than any of the world’s major economies.
Today, India has almost 302GW of installed capacity, although it is estimated that around 21% of the population has no access to electricity. BP estimates that its energy demand will grow 121% by 2035. And despite its renewables capacity forecast to grow 6.5 times over the period, to supply 13% of the country’s electricity, the growth in coal consumption will outpace that of renewables, leaving India second only to China in its use of coal.
According to BP, by 2035 India’s energy demand is forecast to rise by around 200 million tonnes of oil equivalent, with around two-thirds of that met by coal. The country will rely on fossil fuels for 87% of its power generation.
Despite this rapid growth in coal (and natural gas), decentralised renewable energy offers India the chance to increase its installed capacity for a lower financial outlay than if it tried to reach its future capacity requirements using conventional energy alone.
Two questions for India are how will it hit its target of 175GW of renewable energy by in such a short time scale and how will the programme be funded? A number of developers in India already run fairly large-scale renewable energy farms – almost 34GW of wind and solar is an impressive figure.
The country’s installation plans include substantial rooftop solar programmes. India can already boast the largest single rooftop array in the world, at Amristar in the Punjab region. The scheme has a capacity of 11.5MW across a single rooftop, with a further 8MW installed of additional roofs on site
India’s central and reginal governments continue to encourage the development of grid-connected rooftop and small-scale solar PV across the country. The Punjab government wants to install 1GW of solar PV by the end of fiscal year 2016-17. So far, it has installed 470MW.
Earlier this year the central government unveiled a programme to install around 40GW of grid interactive rooftop solar by 2022. Schemes will range in capacity from 1kW to 500kW.
Funding is coming from a range of sources, including international banks. Late last year, the Asian Development Bank (ADB) signed a deal with the Indian Renewable Energy Development Agency to fund its Clean Energy Finance Investment Programme. The ADB supplied $200m as a first tranche of a $500m debt funding agreement that would be used to debt finance around 10 renewable energy projects.
The $500m in funding will comprise $300m in equity and $200m of additional debt funds from unrestricted sources. The total investment for the scheme is $1bn, which is expected to be enough to develop 990MW of clean energy.
In an indication of the investment coming into India’s energy sector, the ADB is also supplying $1bn to India’s national transmission company, Power Grid Corporation of India, to help fund the Green Energy Corridor initiative. This will improve transmission and distribution around the country and also aims to deliver new connections into rural areas.
Overall, India’s rapidly rising energy requirements coupled with its current renewable energy plans make it an exciting market for developers. Although current predictions suggest that coal use will rise over the next 20 years, the fast decline in the cost of solar offers hope that India’s plans energy will gradually change.
The World Future Energy Summit will host a half-day country focus on India’s renewable energy plans on Wednesday 18th January. The discussion will discuss the government’s clean energy strategy, options for technology use and funding. Click here for more details.