July 19, 2019 (IEEFA India) ̶ India is likely to obtain 63% of its installed power capacity from non-fossil fuel sources (including hydro) by 2029-30, according to the Central Electricity Authority (CEA). This would significantly exceed the country’s Paris agreement target of a 40% share of installed power capacity from non-fossil fuel sources by 2030.
The CEA report estimates that growth in new installed power capacity will lead renewables to generate close to 44% of all electricity consumed in India in 2029-30.
In a briefing note released today, India Energy Transition Fuels Growth Path for Sustainable Development, IEEFA notes that CEA’s analysis predicts moderate growth in increased coal capacity (from net end-of-life coal plant closures), while gas and biomass growth are expected to be negligible. The CEA makes a base forecast for thermal power capacity of 291GW by 2030, a clear expansion from the 225GW operating as of March 2019. But the CEA’s bullish conclusion is that thermal capacity will drop from 64% to just 35% of total installed capacity in only 11 years.
The CEA models also take into account that India will need 34GW/136GWh of battery energy storage systems (BESS) by 2030 to balance the grid reliability and stability needs of 440GW of variable renewable energy capacity, supported by 73GW of hydro and 10GW of biomass. In view of the rate of technology change and cost deflation in batteries, this ambitious forecast could prove to be prescient.
The CEA’s optimal capacity generation mix estimates are based on projected demand obtained through India’s 19th Electricity Power Survey (EPS). The projections are adjusted to include estimated contributions from solar rooftop generation.
Clean energy can help achieve India’s twin objectives of strong economic growth and sustainability
“India dominates the list of countries with the most polluted cities on earth. As per World Bank estimates, air pollution costs are equivalent to 8.5% of GDP. India is also facing extreme and growing water shortages in major cities. Transitioning to clean energy can help the country achieve its twin objectives of strong economic growth and sustainability,” said Vibhuti Garg, the energy economist who wrote the IEEFA brief.
Garg notes that the momentum to build more renewable energy (RE) capacity should not only be reflected at the central planning level, but also integrated and co-ordinated with the plans of state governments. India is making huge strides, with 13GW of solar projects tendered in the month of June 2019 alone.
Gujarat is a front runner, with the state announcing plans to increase power generation capacity from renewable sources to 30GW in the next three years. However, IEEFA believes that in order to build energy security and incorporate an ever-increasing share of zero pollution and deflationary renewable energy, planners need to prioritise expansion of quality interstate grid transmission. This is a critical pre-requisite for India to meet its RE ambitions.
IEEFA notes that adoption of grid-scale energy storage technologies is critical for large-scale integration of renewable energy sources. With advances in technology, the cost of battery energy storage systems has been decreasing at a fast pace, down 30% in 2018 alone. India needs to invest its technical and financial resources to create energy storage capacity, that will enable it to absorb more RE into the power system into the foreseeable future.
“Renewable energy will further aid in addressing the issue of air pollution and water stress, as well as help mitigate India’s chronic over-reliance on fossil fuel imports, which cause inflation and erode the value of the Rupee,” said Garg.
Vibhuti Garg ([email protected]) is an IEEFA energy economist.
Kate Finlayson ([email protected]) tel: +61 418 254 237
The Institute for Energy Economics and Financial Analysis (IEEFA) conducts global research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.