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India looks likely to miss the 2022 renewable energy targets

2021-06-05, 1:48pm Renewable

A farmworker cleans the solar panels of a solar water pump at the farm-49d7ed8596bb6135bff81de7c74ed7221622879293.jpg

A farmworker cleans the solar panels of a solar water pump at the farm. Photo by Prashanth Vishwanathan (IWMI)-flickr.

by Nandini Jhalani on 3 June 2021
•    India has an ambitious target of installing 175 gigawatts (GW) of renewable power by 2022 but the progress on it is far from satisfactory with 80 GW capacity yet to be installed.
•    Even though industry experts doubt that India will be able to achieve the target by the end of 2022, the government is confident of achieving it.
•    A major factor that has affected the growth of the renewable sector in the last two years is COVID-19. To help the industry, the government has taken a series of steps to help the industry combat the negative impact of the pandemic.
India has one of the most ambitious targets of installing renewable power and over the years has made substantial progress in the sector but industry experts point out that the country is set to miss the target of installing 175-gigawatts (GW) of renewable energy capacity by 2022.
In 2015, just before the Paris Climate Summit, the government of India had said that it will install 175 GW of renewable power by 2022 including 100 GW of solar power. The rest was targeted from wind (60 GW) of bio-power (10 GW) and small hydropower (5 GW). At present (till the end of April 2021), India’s installed renewable energy capacity is about 95 GW including 40.5 GW of solar power.
For a country such as India, which is the world’s third-largest emitter of greenhouse gases, the clean energy sector is crucial as it can help in tackling climate change and reduce the consumption of fossil fuels.
In fact, even as India is struggling to reach close to the 175 GW target, India’s Prime Minister Narendra Modi has already set eyes on enhancing the installed capacity of renewable energy to 450 GW by 2030. Modi, who has focused on the cause of renewable energy since becoming the prime minister, had made the announcement during his September 2019 address at the United Nations Climate Action Summit.
It is not just the Indian prime minister who is pushing for renewable energy. According to the International Renewable Energy Agency’s (IRENA) Global Renewables Outlook 2020, the share of modern renewable energy in the final energy supply could go up to 66 percent by 2050.
Though India in its voluntary goals submitted to the UNFCCC (United Nations Framework Convention on Climate Change) hailed its renewable target plans as “one of the largest renewable capacity expansion programmes in the world” the progress on the front is not up to the mark.
Vinay Rustagi, who is the Managing Director of Bridge to India (BTI), a renewable power consultancy, expressed apprehension about India achieving the 175 GW target.
“According to our estimates, before COVID-19, India was expected to achieve a total installed capacity of about 122 GW by the end of 2022 including biomass and small hydro. But the picture has changed after COVID-19 and we estimate India to achieve only about 110 GW by the end of the next year,” Rustagi told Mongabay-India.
“We simply don’t have the execution capacity required to scale up annual capacity addition to 25-30 GW. There are a lot of factors involved – land, transmission, grid robustness etc. Moreover, where is the demand for such an amount of power?” he questioned.
The government of India is, however, confident of achieving the target or at least reaching close to the target by the end of 2022. In March 2021, the Indian government’s Ministry of New and Renewable Energy (MNRE) said “projects of 49.7 GW capacity are at various stages of implementation and projects of 25.91 GW are under various stages of bidding.”
While India’s chances of achieving this target remain dismal, Sunil Dahiya, an analyst with the Centre for Research on Energy and Clean Air (CREA), an independent research organisation working on clean air and clean energy feels that even if we won’t achieve installing 175 GW of renewable energy power, India will make significant progress towards it by 2022.
“Keeping in view the progress made before COVID-19 and with the process of installations halted during it, it seems difficult for India to achieve such a target. That being said, there is still a lot of capacity that is in the pipeline or tendered, so even if we won’t achieve 175 GW of renewable energy, we will make significant progress towards it by 2022,” Dahiya told Mongabay-India.
He emphasised that as India is doing “decently in the renewable energy sector … the prices for this electricity have fallen and are lower than new coal.”
Dahiya added, “last year, we saw (a) tender where solar, wind and small hydro have been clubbed together and the price of that electricity has come down to around Rs. 3 (per unit).”
What ails India’s renewable energy sector?
It is mid-2021 and India still has to achieve the installation of about 80 GW of renewable power by 2022.
There are many factors plaguing the growth of the sector. For instance, financing the renewable energy sector in India comes with its own set of challenges such as the high interest rate on loans that range from 12-15 percent compared to countries such as the US and Europe where it is in the range of 5-7 percent.
Record low tariffs that India has witnessed in the case of solar power projects is another area that is impacting the growth of the sector. Alok R. Gupta, a renewable energy expert, in his paper ‘Financing India’s Renewable Energy Vision’ said that while low tariffs are lucrative for the distribution companies, they are less viable for developers.
Another major irritant is that India is largely import-dependent when it comes to solar modules, batteries for power storage and for manufacturing other renewable energy systems.
The experts believe that the government’s support has not been enough and in the absence of specific policies to ensure that the sector grows, the progress towards India’s renewable goals has suffered a drastic blow.
Rakesh Kamal, an independent climate negotiations expert and host of the podcast ‘Climate Emergency’, said the “policy push is not enough.”
“There needs to be financial support for people, especially in the solar industry where companies are going bankrupt due to these lockdowns. One of my friends in Bangalore (involved in the solar power sector) has decided to shut down his office for a few months and is only paying minimum salaries … Because they can’t risk sending people out in the middle of the pandemic to do installations or marketing,” Kamal told Mongabay-India.
“Small companies or startups can’t really function like this. And the government keeps announcing that they will support the film industry or small industries, but the renewable energy industry doesn’t feature anywhere,” Kamal said.
While India’s own targets are far from being achieved, the Indian government has been trying to champion the cause of solar power. India has led the efforts to establish the International Solar Alliance.
In 2015, when the government had announced the target of 100 GW solar power, 40 GW were to come from rooftop solar. However, the government has not been able to drive growth in the rooftop solar sector and is less than 10 GW till now.
In fact, the government over the past few years shifted the focus towards large wind and solar parks, which can impact the environment and lead to conflicts with the local communities due to land issues.
“When we talk about renewable energy, we aren’t stopping to talk about decentralising renewable energy. That would give independence to so many people like those who are off-grid or in places where it would be much more beneficial. Even communities would get independence from power cuts, but these aren’t even being looked at. We don’t give any importance to rooftop solar either, all we talk about now are solar plants,” Kamal said.
Impact of COVID-19 on India’s renewable sector
COVID-19 has had a wide-ranging impact on the Indian economy and the renewable energy sector has not been able to escape from its wrath either. However, even as the MNRE maintains that the renewable sector kept growing despite the challenges of the pandemic, the reality on the ground tells a different tale.
“The pandemic has hit all the sectors very hard, including the manufacturing and industrial sectors and the renewable energy sector has not been isolated either. There has been a negative impact on new installations both from the labour and supply chain perspectives. Even the demand for electricity and coal consumption has come down. This effect has taken place across all sectors,” Dahiya said.
In fact, according to a report, the MNRE has taken a series of steps to help the renewable energy sector. For instance, the ministry recently stated that the renewable energy projects that were supposed to be commissioned from April 2021 can claim extension owing to the second surge of the COVID-19 pandemic.
A recent report by Bridge to India, while talking about the issues concerning the solar energy sector, said: “short-term market outlook is murky because of increase in project execution costs and delays arising from the second wave of COVID-19.”
“We expect construction progress to slow down considerably in Q2 2021 due to lockdown across states. Reluctance of DISCOMS (power distribution companies) to sign PPAs (Power Purchase Agreements) also continues to be a major concern with as much as 20,000 megawatts (20 GW) of auction projects yet to be tied up contractually,” said the report.
Source; Mangabay India