- India is today among the world leaders operating renewable and clean energy generation programs.
- Government support backed by strong policies and an encouraging inflow of foreign investments is driving growth in the clean energy production segment.
- A lot more needs to be done in augmenting the efforts in the production of renewable energy in order to adequately support the increasing energy needs of the fast-growing economy.
India is witnessing exponential growth in electricity demands. Also, being the third-largest emitter of greenhouse gases in the world next to China and the US, India cannot afford to stay back from investing in the production of renewable energy. Backed by strong environmental policy, the Indian government is taking an active and fervent interest in augmenting its renewable energy generation capacity. However, there is a big list of challenges to overcome in making a shift to clean energy sources and boost the country’s capacity to produce as much renewable energy that would sufficiently meet the growing demand.
Addressing the UN Climate Action Summit in New York, the Indian Prime Minister Narendra Modi called for a global people’s movement to create a behavioral change to combat climate change. During the said meeting, he pledged to double India’s clean energy generation capacity to 450 GW.
Today, renewable energy makes up 22% of the country’s total installed capacity. By 2022, India wants to achieve a capacity of generating 175 KW of renewable energy and increase it to 500 GW by 2030 which would meet 40% of the total energy needs of the country.
Energy and climate change expert Chandra Bhushan says, “This is one of the most ambitious renewable energy targets in the world, far more than the targets set by developed countries. Overall, these targets are highly desirable, but will need major reforms in the transmission and distribution sectors and stable policies to achieve.” The Indian government has also confirmed that it will require about $330 billion over the next ten years to back its renewable energy goal.
Factors driving change
India enjoys around 300 sunny days in a year. With a long list of perennial rivers, and one of the longest coastlines of the world stretching to over 7,500 Km, India is at a highly advantageous position to invest in a versatile range of clean energy production programs. Though the production of hydroelectricity commenced shortly after the independence, the wind and solar energy sources were not tapped during the last seven decades on account of the lack of governmental policies and shortfall of necessary technologies.
India is seen rightly investing in cleaner technologies today. The country is also now well-positioned to realize its renewable energy goals. India’s continued efforts in the lines of producing green energy can play a decisive role in transiting to a fully sustainable power generation system. Indian has recently made highly noticeable strides in the renewable energy domain. The highly concerning climate change issue around the globe has also moved the Indian government to evolve an elaborate plan to enhance the renewable energy production capacity in newer lines.
Defining renewable energy targets
Further to India’s commitments to the Paris Climate Accord, India has planned to bring down the volume of its carbon emission by 33 to 35% from the levels recorded in 2005 over the fifteen years. While contemplating on a shift from fossil-fuel based power generation to renewable energy sources, India will have to be able to produce 100 GW of solar energy, around 60 GW of wind energy, about 10 GW of biomass energy and 5 GW of hydropower by the year 2022.
India will have to double its electricity production output by 2030 to be able to meet the massively surging demand. While the country will have to honor its commitment to bring down the carbon emission levels by 35% when compared with the 2005 levels, it would mean the nation will have to be able to produce around 24 GW of renewable energy per year until 2030. Such a massive expansion in the clean energy production efforts will demand to fund about $76 billion further boosting it up to $250 billion over the following years till 2030. Hence the upcoming renewable energy generation programs will demand about $30 billion per year over the next decade.
Moving in definite lines towards producing greener energy
The government of India has invited foreign investment in the clean energy production sector to support the ongoing efforts in the renewable energy generation domain. The country is now working with an aggressive target of producing about 450 KW of green energy by 2030. The nation is strengthening its macroeconomic basics while focusing on policy stability and giving away a number of financial incentives. To facilitate the easy transfer of technology and capital, India is allowing 100% foreign direct investment in the renewable energy sector. The nation is giving several tax breaks for installing massive manufacturing plants for solar cells, electric vehicles, charging infrastructure, and lithium storage batteries. For the sake of seamlessly integrating the renewables, India is also strengthening its grid. India has a huge renewable energy market in the world today. Also, it has a diversified portfolio of projects to attract investors and reduce their risk perception.
India’s renewable energy sector is well-developed now. It presents lower risks, high returns, and predictable yields to the investors. When compared to the markets of similar size namely those of China and the US, India’s RE market provides the investors risk-adjusted excess returns. Given the lowering returns in their domestic markets, India’s RE segment appears more attractive to foreign investors.
Challenges to address in the RE production sector
There are potential dampeners perceived that can thwart the nation’s efforts to achieve its RE targets. Therefore, India has to take definite steps in combating those challenges by strengthening its transmission infrastructure, simplifying the land acquisition processes, bringing about transparency in the contracting procedures, and bringing back strict tariff caps on reverse auctions that can impact investor gains. India must also ensure that the companies breeding on its soil will commit to their RE purchase obligation. If the policymakers in the country pay attention to such issues, it is possible to make a definite advance in achieving the clean energy targets in the shorter span.