The State of Renewable Energy in India: CSE

The Centre for Science and Environment (CSE) has released a report titled The State of Renewable Energy in India 2019. Chandra Bhushan, the deputy director general of CSE states that the report, “takes a close look at where we stand now, what are the strengths of and the challenges facing the sector, and whether the sector can overcome these obstacles and emerge as a viable alternative to conventional energy sources”. The report is centered around understanding the logic behind India’s renewable energy target (175 GW renewable capacity target by 2022), since renewable energy is undoubtedly the future, but the question about how India will achieve this, remains.
 
Currently, the renewable energy capacity in India is 73 GW i.e. 20% of the country’s total energy capacity. According to Bhushan, “we believe that India needs a renewable energy policy that both de-carbonise the economy and provide access to large numbers of people who are energy-deprived. But a mere number target will not suffice. We need a clear vision going forward.”
 
As per the report, the renewable energy sector in India is a sunshine industry, given the combination of certain favourable policies and good market conditions. Solar has particularly made considerable progress since, large-scale solar has shown an average annual growth rate of over 70%, in the past four years. The installed solar capacity has seen an increase from 2.6 GW in March 2014 to 23.1 GW in June 2018. Priced on an average at less than INR 3 per unit, solar and wind energy has become cheaper than coal in India.
 
Yet, the CSE report lays down some key concerns plaguing the sector, given the slowdown witnessed in 2018, caused by the financial difficulties being faced by the distribution companies, due to import tariffs and subsequent tariff increases.
 

• Inconsistent policy: According to Priyavrat Bhati (advisor, Energy Group, CSE), “Nothing can be more disruptive for an emerging sector that seeks to attract global investors, than ad hoc and abrupt policy changes.” For instance, in the solar module manufacturing industry, the government had reserved auction capacity for domestic manufactures. After the WTO censured this, import duties were applied but later removed. At present, a safeguard duty of 25% has been levied on imported modules. In the wind industry, an auction-based regime for awarding bids from the feed-in-tariff process has been introduced.
• Underperformance by distribution companies (discoms): This has led to dampening of investor confidence and developers’ interest. The Ujjwala Discom Assurance Yojana, the latest attempt at reform, has failed to deliver desired results. The discoms are enduring financial stress, leading to delays in payments for developers, cancellation of auctions and lack of contracts’ enforcement.
• Failure of solar rooftop to make headway in a market skewed in favour of large-scale renewable energy: While India is aiming to achieve 40 GW of rooftop solar capacity by 2022, as of November 2018, only 1,334 MW of grid-connected solar rooftop systems have been installed. The preference for commercial and industrial installations had disrupted the uptake of rooftop solar, even though residential consumers hold immense potential, but account for less than 20% of installed capacity.
• Distributed energy pushed to the back-burner: Almost all schemes (like SAUBAGHYA), focus on grid extensions i.e. connecting un-electrified households to centralized distribution and transmission networks. However, this does not lead to consistent availability or supply of electricity. Thus, the government’s goal of ensuring universal energy access appears misplaced.

It is within the context of these concerns, that CSE has presented the following key recommendations:

• Need to look beyond INDCs (Intended Nationally Determined Contributions) to chart an ambitious low-carbon growth path way

• Need to increase the share of distributed (solar rooftops, mini-grids) renewable energy generation

• Need to encourage the use of “smart grids” (based on communications infrastructure, information technology and control systems) for efficient delivery

• Need to rethink the discom model, since discoms comprise the heart of the electricity market

• Need to invest in the development of inexpensive energy-storage capacity, based on indigenous research and policy support to improve the existing technology’s cost and performance and driving up the scale for the battery industry

• Need to make energy access a key priority for sectoral growth

 
Thus, in order to prevent the disruption of existing electricity markets and systems, due to increased renewable energy, there is a critical need to engage with distributed systems and evolve the current discom model (rethinking fundamental principles of business and institutional incentives), since a large-scale model alone will not suffice. The destabilization of the system actually presents an opportunity to reframe subsidies and target consumers effectively.
 
According to Bhushan, “we stand at the cusp of a momentous shift in the energy sector. For the first time, decarbonized electricity appears feasible in the foreseeable future; it is not an abstract vision. The question is, whether India will reach peak coal and 100 per cent renewable quickly and efficiently, or whether it will be a delayed process, merely egged on by global momentum.”
 
India Outbound
February 4, 2019
 
 

source https://indiaoutbound.org/the-state-of-renewable-energy-in-india-cse/