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Will India hit the target to produce 175 gigawatts RE?

Will India hit the target to produce 175 gigawatts RE?

The country has set an ambitious target of installing 175 GW of renewable energy capacity by the year 2022. This article traces the growth of renewable energy in India since then. Read on

To save the world from greenhouse gas emissions, 195 United Nations Framework Convention on Climate Change (UNFCCC) members signed the Paris Agreement to reduce, mitigate greenhouse-gas-emissions.The countries decided to keep the global temperature increase “well below" 2 degrees Celsius and to pursue efforts to limit it to 1.5 degrees Celsius.

India too was one of the signatories. Greenhouse gas emissions has not only havocked the environment but has also contributed to rising of various diseases in human. Already we are witnessing the ill-effect of greenhouse gas emission such as no rain for long periods and then a sudden bout of excessive rainfall,flash floods and extreme drought, cloudburst, melting of polar ice caps, landslides, and many more.

All these have a devastating affect on humans and economy. In many instances’ humans have lost their lives due to flooding, drought, cloudburst and landslides. Crops have either been damaged or have been washed away. Landslides and flood have brought the entire region to a standstill. Drought and flash floods have resulted in farmers committing suicides.

In this backdrop, the 21st session of the Conference of the Parties (COP21) of the UNFCCC was held in Paris from November 30 to December 12 2015. The 195 participating nations unanimously decided to reduce greenhousegasemissions. India committed to reduce green house gas emission intensity of its GDP by 33 to 35 per cent by 2030 below 2005 levels.It has also pledged to increase the share of non-fossil fuels-based electricity to 40 per cent by 2030.The country also agreed to enhance its forest cover which will absorb 2.5 to 3 billion tonnes of carbon dioxide (CO2), the main gas responsible for global warming) by 2030.Lastly, to tackle green house gas emissionthe country decided to enhance investments in sectors vulnerable to climate change, such as agriculture, water resources, coastal regions and health and disaster management.

To honour the pledge at COP21 and to save the environment from further degradation, one of the initiatives started by India is the gigantic mission to increase renewable energy capacity by 175 GW by 2020 with a focus to increase non-fossil fuels-based electricity to 40 per cent by 2030. Thus, started India’s renewable energy mission. From 35.51 GW of cumulative renewable energy installed capacity in 2014 the installed renewable energy capacity has touched 89.22 gigawatt (GW) as on 30 September 2020. A massive increase in renewable energy capacity since then.

According to the Ministry of New and Renewable Eenergy (MNRE), the country’s installed RE capacity touched 89.22 gigawatt (GW) as on 30 September 2020. In 2016, the year in which India signed the Paris Agreement, according the MNRE, the country’s cumulative solar capacity stood at 6753.38 MW at the end of 2015-16 up from 3743.97 MW a year ago, which expanded by 5,525.98 MW in 2016-17. In 2017-18, India added 11,788 MW. In 2018-19, 6,529.2 MW of new solar power capacity was added.

Table 1 
(by the end of 2019)                                                                                                          


Installed capacity (GW)

Under Implementation (GW)

Tendered (GW)

Total Installed/ Pipeline (GW)

Solar Power





Wind Power





Bio Energy





Small Hydro





Wind Solar Hybrid





Round the Clock (RTC) Power





Source: PIB

To further boost the growth the government of India launched the Jawaharlal Nehru National Solar Mission (JNNSM), or the National Solar Mission in 2010. The objective of JNNSM is to establish India as a global leader in solar energy by creating the policy conditions for its deployment across the country.In the first two phases of JNNSM, the government introduced reverse bidding as the market-oriented procurement mechanism as against the practice of feed-in tariff and capital subsidies (which covers a share of the upfront cost of installing something like a solar water heater or domestic solar power plant). This resulted in substantial reduction of solar electricity supply prices.The National Solar Mission also established bundling scheme wherein solar power is bundled with coal-based power to strengthen power distribution. MNRE states bundling scheme as “bundle of relatively expensive solar power with power from the unallocated quota of the Government of India (Ministry of Power), generated at NTPC coal-based stations, which is relatively cheaper and sell it to the Distribution Utility at weighted average price.” According to a report by World Bank, “Paving the Way for a Transformational Future: Lessons from Jawaharlal Nehru National Solar Mission Phase I”, states that bundling of solar power with cheaper conventional power reduces the tariff impact of solar power on the distribution utilities. To promote solar energy, the Government has launched several schemes such as Scheme for development of solar parks and ultra mega solar power projects, Operationalization of 300 MW solar PV projects by defence establishment and para military forces, Scheme for setting up of 750 MW grid-connected Solar PV Power Projects under Batch-1 of Phase-II of JNNSM with viability gap funding support, Grid Connected Rooftop, scheme for setting up of 1000 MW of grid-connected solar PV power projects by Central Public Sector Undertakings (CPSUs) under Batch-V of Phase II of JNNSM; to name a few. There are many such schemes launched by the government to increase renewable energy capacity in India.

The government established Solar Energy Corporation of India (SECI)to facilitate the implementation of JNNSM and achievement of targets set therein. A renewable energy corridor was also launched to develop a dedicated transmission grid for areas with abundance of sunlight or wind to create solar and wind energy. Solar radiation monitoring stations were also set up across India.

Initiatives to power the renewable energy sector

The government since the signing of the Paris Agreement in 2016 has launched several scheme for the development of renewable energy in India, one such scheme launched by MNRE is the Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) Scheme for farmers for installation of solar pumps and grid connected solar and other renewable power plants. The scheme aims to add solar and other renewable capacity of 25,750 MW by 2022 with total central financial support of Rs. 34,422 crore including service charges to the implementing agencies.

With an objective to provide a framework for procurement of solar & wind power through a transparent process of bidding including standardisation of the process and defining of roles and responsibilities of various stakeholders, the Ministry has issued Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar & Wind Power Projects. As per the guidelines solar power generators have been allowed to submit documents/lease agreement to establish possession/right to use 100% of the required land in the name of the Solar Power Generator for a period not less than the complete term of the PPA, on or before the Scheduled Commissioning Date (SCD).

The Ministry has undertaken scheme to develop Ultra Mega Renewable Energy Power Parks (UMREPPs) under the existing Solar Park Scheme. The objective of the UMREPP is to provide land upfront to the project developer and facilitate transmission infrastructure for developing Renewable Energy (RE) based UMPPs with solar/wind/hybrid and also with storage system, if required.

To promote wind - solar PV hybrid power the government has come up with National Wind-Solar Hybrid Policy. This policy provides a framework for promotion of large grid connected wind-solar PV hybrid system for optimal and efficient utilization of wind and solar resources, transmission infrastructure and land.

To develop the offshore wind energy in Indian Exclusive Economic Zone along the Indian coastline of 7600 kms, the government notified the National Offshore wind energy policy and has identified eight zones each in Gujarat and Tamil Nadu having cumulative offshore wind energy potential of 70 GW.

The inter-state transmission system (ISTS) Phase-II (66.5 GW REZ) scheme is being implemented in phases by way of either Tariff Based Competitive Bidding (TBCB) or through Regulated Tariff Mechanism (RTM) by PGCIL. The TBCB bids are being carried out by PFC and REC. The allotment of works in TBCB or RTM is done by established committees of transmission constituted by Ministry of Power.The government has identified potential renewable energy zones (66.5 GW – Solar 50 GW and Wind 16.5 GW)in the states of Tamil Nadu, Andhra Pradesh, Karnataka, Gujarat, Maharashtra, Rajasthan & Madhya Pradesh and a comprehensive transmission scheme was evolved integrating these renewable energy zones.

The Ministry of Power has issued an order regarding opening and maintaining of adequate Letter of Credit (LC) as Payment Security Mechanism (PSM) under Power Purchase Agreements (PPAs) by Distribution Licensees (DISCOMs).

Apart from these initiatives, the Ministry has requested PFC/REC/IREDA to extend short term loan to DISCOMs for the purpose of making payments to renewable energy generators and has set up dispute resolution mechanism for wind/solar projects to consider the unforeseen disputes between solar/wind power developers and SECI/NTPC, beyond contractual agreement.

Challenging the Constraint: Innovation and Technology

There are myriad of challenges facing the industry. Land acquisition still remains a prime challenge for the setting up large solar projects in India. The government has set up Project Development Cells to address this concern and for quick approval of renewable energy projects. To achieve the set target of renewable energy generation and to overcome land acquisition challenges, the government has created favourable policies and has invited tenders for setting up of floating solar and offshore wind energy plant in India. These two projects are on a growth traction in India. It is a fact; solar powered electricity is generated only when sunshine is available and to get the maximum electricity out of the solar panels solar tracker system are installed to track the sun’s movement and adjust the solar panels panel perpendicular to the sun’s rays thus ensuring that the maximum amount of sunlight falls on the panel.

Paucity of skilled manpower: According to a survey conducted jointly by the Council for Energy, Environment and Water (CEEW) and the Natural Resources Defence Council (NRDC), unavailability of appropriately skilled manpower has been identified as one of the most prominent challenges in hiring required personnel.

Plunging solar tariff: Of late the solar power tariffs have plunged to a low of Rs. 2/kWh. Industry trackers feel this is not good for the renewable energy sector. They opine setting up a solar plant plant of the same capacity of coal-based power plant cost almost equal and in some cases exceeds coal-based power plant.There are instances of plans of huge solar plants beings shelvedfor want of buyers. “Solar power tariff plunging to an all-time low of Rs.2/kWh hascome with mixed feelings. Onthe positive side, it will accelerate the acceptance of renewable power which has anadditional feature of avoiding the adverse impact of climate change. Also, low tariff augurswell for the consumers as well as ailing state power distribution entities which are unable tofully recover their power purchase cost from the consumers. However, such a low tariffwould have far reaching implications on India’s energy sector. Such a low tariff shows asense of desperation among the players which would eliminate small to medium players fromthe sector. Also, in the past, we have seen cancellation of around 8 GW of bided solar powercapacity mainly on the back of declining tariffs. The difference between the lowest tariffarrived in SECI’s November 2020 auction and other auctions held from April 2020 onwardsis as high as Rs.1/kWh which could propel cancellation of some of the auctions. Also, withthe declining tariff scenario, state power distribution utilities could refrain from new tendersin near future in anticipation of further low tariffs which in turn could result in delays inachieving the set target of renewable power generation capacity in India. Furthermore,viability of the projects for next 25 years at such a low tariff would also be critical and anyunforeseen rise in their project cost and interest rates along-with lower than anticipated power generation from their projects could result in an unviable proposition,” says Hardik Shah, Associate Director - Corporate Ratings, Care Ratings. “Even though the low solar tariffs are good for the country as solar power can now compete with thermal in terms of affordability, but it is also important to consider if the projects can be implemented with such low tariffs. There have been many instances where the awarded projects have been abandoned and actual production could not happen as the projects were considered unviable because of such low bids,” says Ritaban Basu, Head- Risk & Analytics, Brickworks Analytics.

Indo-China skirmish: The ongoing military standoff between India and China is impacting the growth of renewable energy especially solar negatively. Bulk of solar PV panels installed in the country were sourced from China. Now, with India extending safeguard duties on solar cells, domestic solar projects have been badly hit as imported solar cells from China was cheaper than domestic solar cells. “Majority of the solar PV modules installed domestically continue to be sourced especially from China, given the high cost competitiveness in sourcing of such modules. While safeguard duty has been in place since July 2018 which has been recently further extended for another one year till July 2021, it has also not helped in a big way to encourage/improve competitiveness of the domestic manufacturing of PV modules so far. In the backdrop of the ongoing geo-political tensions prevailing between India and Chinain recent periods, sourcing / availability of PV modules for the developers has, however, not been adversely affected. Nonetheless, any tightening on the trade restrictions with China will be a potential riskwhich will have a negative impact especially for the developers who have won the PV projects in bidding process, basis the expected availability of such imported modules at competitive pricing,” says Girishkumar Kadam, Sector Head - Corporate Ratings, ICRA. To counter the anticipated shortage of solar cells in India, and to increase domestic manufacturing to make India self-reliant, the government came up with Aatmanirbhar Bharat initiatives. “Policy push by Government of India (GoI) for local manufacturing under its “Aatmanirbhar Bharat” programme is strong which is certainly a positive for domestic PV module/cell manufacturers. This is also evident from the recent introduction of production linked incentive (PLI) scheme announced by Ministry of Finance, GoI as well as extension of safeguard duty at 15% for 1 year till July 2021. However, policy clarity on details of the PLI scheme as well as other measures such as basic customs duty on sourcing of PV modules including a long term trajectory is still awaited. Further, there has been a greater push by GoI on mandatory use of domestically manufactured modules through announcement of various schemes over the past 2 year period by MNRE such as CPSU scheme, domestic manufacturing linked solar projects and KUSUM scheme; which is also expected to benefit in improving the order book for domestic solar OEMs” says Girishkumar Kadam.

Impact of Covid-19: Like all sectors which were battered by Covid-19, the renewable energy sector too was hit but authorities were quick to support the renewable energy sector during the  Pandemic. MNRE granted project deadline extensions to help the entire value chain from developers, EPC players, original equipment manufacturers, et al, to overcome the Covid-19 disruption. “Impact of Covid-19 on the solar industry could be divided in two parts, viz.,impact on under-implementation project and operational projects. Due to Covid-19-induced lockdown and supply chain disruptions as well as labour shortage, project implementations have been delayed, however, MNRE has provided 5 months’ extension in project completion timelines which is expected to help all under-implementation projects. As far as operational projects are concerned, impact of Covid-19 has been very limited as solar irradiation has not been impacted due to Covid and so does the power generation from solar projects. Additionally, amidst the pandemic, MNRE re-emphasized the ‘Must run’ status of renewable projects which has led to very limited instances of grid curtailment for renewable projects across the country. Also, MNRE directed the power distribution entities to continue regular payment to renewable projects which has resulted in largely stable payment track record for solar projects despite Covid-19. Maximum impact of Covid-19 has been on the rooftop solar segment whereby on the back of reduction in scale of operations from industries, power demand had been on the lower side which resulted in lower power off-take and delays in the payment. Additionally, rooftop solar installations have been put on hold by many companies on the back of economic slowdown which has affected the companies engaged in rooftop solar power installations,” says Hardik Shah.

Will it and Will it not?

Now the moot question. Will India hit the target to produce 175 gigawatts of renewable by the years 2022? Based on the progress so far and the current impediments due to Covid-19, India-China skirmish, funding, finance and land constrain, India may miss the target. “As per our view, it is unlikely for India to achieve 175 GW of renewable power capacity by end FY22. After witnessing highest ever solar capacity additions in FY18 at 9.36 GW, solar capacity additions were low at 6.53 GW in FY19 and 6.45 GW in FY20. The performance on Wind side is even poorer with less than 2 GW annual capacity additions in the last three years ended FY20. Hydro capacity additions are impacted mainly due to various implementation, environmental and policy-related challenges.On the back of this, there is the black swan event of Covid-19 pandemic which has disrupted the project implementation schedules and still the pandemic has not subsided. In our view, looking at the good pipeline of Solar power projects and expected auction of further solar capacity before end of FY21, India could reach near to a level of around 120 GW of renewable capacity by end FY22. Also, in order to achieve this level of renewable capacity, it would depend on the pandemic situation in times to come along-with timely auction of further solar capacity,” says Hardik Shah.

We still have a year to go and we never know what the government has up his sleeves.




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