India’s renewable energy sector is undergoing a dynamic change, driven by ambitious government policies and significant investments across various segments. In addition, several segments that were earlier considered underdeveloped, such as distributed solar, offshore wind, round-the-clock renewables, compressed biogas, pumped hydro storage, and green hydrogen and derivatives, are now receiving significant government and industry attention.
This article provides an overview of the renewable energy sector, highlighting the latest developments and trends driving India’s green growth…
Solar energy
As of July 31, 2024, the cumulative solar capacity stood at 87.21 GW – the highest among all renewable segments. This includes 67.52 GW from ground-mounted solar plants, 13.4 GW from grid-connected solar rooftop setups, 2.59 GW from hybrid projects (solar component) and 3.7 GW from off-grid solar. The sector also experienced the fastest growth, with 5,394.37 MW of installations between April 1, 2024, and July 31, 2024.
The utility-scale solar segment has witnessed strong uptake on the back of low tariffs being discovered. Since September 2023, the lowest utility-scale solar tariffs discovered in tenders have ranged from Rs 2.48 per kWh (Solar Energy Corporation of India Limited’s [SECI’s] 1,200 MW Tranche XVI auction conducted in August 2024) to Rs 2.68 per kWh (NTPC’s 1,500 MW Tranche III auction conducted in May 2024).
In line with the earlier focus on utility-scale projects and solar parks to make the sector more cost-competitive, a shift towards distributed solar projects was expected. Fortunately, in recent months, residential rooftop solar has received much-needed attention with the launch of the PM Surya Ghar Muft Bijli Yojana. The scheme targets 10 million household rooftop solar installations and aims to provide households with 300 units of free electricity every month. The scheme has gained positive momentum, with around 1.4 million applications already received.
Furthermore, the Ministry of Power (MoP) has amended the electricity consumer rules, and now solar rooftop PV systems of up to 10 kW capacity have been exempted from the requirement of technical feasibility study, and the timeline for completing the feasibility study has been reduced from 20 days to 15 days for systems of over 10 kW capacity.
In January 2024, the Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan was announced with a budget of Rs 5.15 billion. This programme is designed for habitations and villages of particularly vulnerable tribal groups (PVTGs). The objective of the initiative is to provide electricity to 100,000 households belonging to PVTGs in regions where grid-based electricity supply is not considered technologically and economically viable. This will be achieved through the installation of 0.3 kW off-grid solar power systems. Additionally, the initiative involves arrangements for solar lighting at 1,500 multi-purpose centres located in PVTG areas where grid-based electricity is not accessible. The programme will be in effect from 2023-24 to 2025-26.
Overall, it is encouraging to see a strong government push to promote the distributed solar segment, which previously seemed neglected within the solar sector. In addition, the focus on promoting the domestic manufacturing of solar products is slowly bearing fruit, with several companies inaugurating factories and announcing expansion plans.
Wind energy
As of July 31, 2024, India’s wind power capacity stands at 47.08 GW, making it the second highest within the renewables sector. The installed wind capacity from April 1, 2024, to July 31, 2024, was 1,188.92 MW. Since June 2023, the lowest utility-scale wind tariffs discovered in tenders have ranged from Rs 3.18 per kWh (SECI’s 1,200 MW Tranche XIV auction conducted in June 2023) to Rs 3.60 per kWh (SECI’s 1,350 MW Tranche XVI auction conducted in July 2024).
The entire wind capacity in India comprises onshore wind projects, despite the country’s potential for offshore wind development, which has long been considered the missing piece in the sector’s growth. However, the tide seems to be turning, with the government announcing several policy initiatives to promote offshore wind projects.
The most significant push has come from the announcement of a viability gap funding scheme for offshore wind projects, with a total allocation of Rs 74.53 billion. This includes Rs 68.53 billion for the installation and commissioning of 1,000 MW of offshore wind energy projects – 500 MW each off the coasts of Gujarat and Tamil Nadu. An additional Rs 6 billion is set aside for upgrading two ports to meet the logistics needs of these projects.
This initiative is crucial for overcoming the high initial costs that have hindered offshore wind projects. The commissioning of 1 GW of offshore wind projects is expected to generate about 3.72 BUs of renewable energy annually, reducing CO2 equivalent emissions by 2.98 million tonnes per year over 25 years. Additionally, the scheme will help create an ecosystem to support India’s ocean-based economic activities, paving the way for the development of an initial 37 GW of offshore wind energy with an estimated investment of Rs 4,500 billion.
The government’s efforts to advance the offshore wind segment are welcome. The industry is now eagerly awaiting the results of SECI’s offshore wind auction, which had been postponed previously. To achieve the 140 GW target for 2030, tender activity and on-ground implementation of wind projects need to pick up pace, as around 15 GW of wind capacity needs to be added per annum. In recent years, however, annual wind installations have only hovered at around 2 GW.
Bioenergy
The bioenergy sector in India is rapidly evolving, with proactive policy measures by the government. In November 2022, the MNRE launched the National Bioenergy Programme for 2021-22 to 2025-26. It is recommended to be implemented in two phases, and substantial investments have been allocated towards waste-to-energy (WtE), biomass and biogas. The first phase was approved with a budget outlay of Rs 8.58 billion, including Rs 6 billion for WtE initiatives to support 100 compressed biogas (CBG) plants. To date, the programme has supported a total of 63 WtE projects.
To harness the full potential of the segment, discussions have long centred on adopting new technologies and tapping new markets. This revival was expected with the uptake of CBG projects and ethanol blending with petrol. Fortunately, both segments have received proactive support from the government.
As of April 2024, 68 CBG plants and 194 retail CBG outlets have been established, and approximately 750 plants are expected to become operational by March 2029. Additionally, large urban WtE projects, with a combined installed capacity of about 591 MWeq, are generating around 824,647 cubic metres of biogas daily and producing 450,735 kg of CBG per day.
Meanwhile, the country has been achieving ethanol blending targets ahead of schedule, contributing not only to the decarbonisation of the mobility sector but also ensuring an additional revenue source for farmers. Recently, Suresh Gopi, minister of state for petroleum and natural gas, gave an update on the ethanol-blended petroleum programme in a written reply to the Lok Sabha. In the period of 2013-14, the production of ethanol blended with petrol was 380 million litres. This surged to 3,023 million litres by 2020-21, marking a sevenfold increase. Additionally, the blending ratio escalated from 1.53 per cent to 8.17 per cent in the same period.
The policy momentum is expected to continue in this space, as recently, the union cabinet approved several amendments to the PM JI-VAN Yojana, providing financial support to advanced biofuel projects. With the approved amendments, the timeline of the scheme has now been extended by five years, until 2028-29. In addition, the scope of the scheme includes advanced biofuels produced from lignocellulosic feedstock, that is, agricultural and forestry residues, industrial waste, synthesis gas and algae.
Overall, as of July 31, 2024, the total bioenergy capacity in the country is 10.96 GW, encompassing various segments: biomass (bagasse) cogeneration (9,433.56 MW), biomass (non-bagasse) cogeneration (921.79 MW), WtE (249.74 MW) and off-grid WtE (351.12 MW).
Hydropower
As of July 31, 2024, India’s large hydro installed capacity is 46.93 GW. The government has implemented various measures to capitalise on hydroelectric potential, including hydro pumped storage. These measures encompass recognising large hydropower projects (exceeding 25 MW) as sources of renewable energy, establishing a hydro purchase obligation as part of the non-solar renewable purchase obligation, reducing hydropower tariffs, allocating budgetary resources for flood moderation and storage hydroelectric projects, supporting infrastructure development (such as roads and bridges), issuing guidelines to encourage the development of pumped storage projects, waiving interstate transmission system (ISTS) charges for hydroelectric projects and pumped storage projects (PSPs), and shortening the approval timeline for detailed project reports by the CEA.
India possesses significant small-hydro potential (25 MW and below) of about 19,749 MW, but less than 20 per cent of this capacity has been utilised, primarily due to challenges in remote site locations and the associated costs of transmission infrastructure. As of July 31, 2024, India’s small-hydro installed capacity is just 5.04 GW. The total generation from small-hydro plants in 2023-24 was 9,485.04 MUs, 15 per cent lower than the 11,170.61 MUs recorded in the previous fiscal.
Within the sector, both industry and government focus and interest appear to be pivoting towards the establishment of PSPs, which was long due given the need for long-duration storage to support the setting up of round-the-clock (RTC) renewable energy projects.
To promote the segment, PSPs have been declared as renewable sources and budgetary support is being provided. The MoP has issued guidelines to promote PSP development, outlining four modes for the allotment of PSP sites to developers. Several other incentives, including the ISTS waiver, have also been announced. A central-level policy for the segment is also expected soon, despite the fact that state-level policy launches have already been initiated.
This bodes well for the segment, as it needed significant attention, especially considering the critical role PSPs play in ensuring grid stability amid the increasing penetration of intermittent renewable energy in India.
Green hydrogen
With an initial investment of Rs 197.44 billion, the National Green Hydrogen Mission (NGHM) seeks to establish a green hydrogen production capacity of at least 5 million metric tonnes per year by 2030. This ambitious goal is expected to attract investments exceeding Rs 8,000 billion, create over 600,000 jobs, and significantly reduce dependence on fossil fuel imports and greenhouse gas emissions. A central element of the NGHM is the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, which provides financial incentives to boost domestic electrolyser manufacturing and green hydrogen production. The mission’s budget allocates Rs 174.9 billion for the SIGHT programme, Rs 14.66 billion for pilot projects, Rs 4 billion for research and development, and Rs 3.88 billion for other components.
Under the NGHM, the MNRE has released guidelines to initiate pilot projects across the mobility, steel and shipping sectors. In the transportation space, the scheme has allocated Rs 4.96 billion until 2025-26 to transition vehicles from fossil fuels to green hydrogen and the develop the necessary refuelling infrastructure. The steel sector is set to receive Rs 4.55 billion by 2029-30 aimed at replacing traditional fossil fuels with green hydrogen alternatives. Meanwhile, the shipping industry has been allocated Rs 1.15 billion until 2025-26 to support the adoption of green hydrogen for ship propulsion and the establishment of bunkering facilities at various ports.
Several tenders have been floated and auctioned in recent months related to electrolyser manufacturing, green ammonia production and the establishment of green hydrogen hubs. In August 2024, SECI issued a call for proposals to identify an agency for establishing green hydrogen hubs under the NGHM. The goal is to create regions capable of supporting large-scale green hydrogen production and utilisation, with a budget of Rs 2 billion allocated until 2025-26. The tender aims to fund at least two hubs, each with a planned capacity of at least 100,000 metric tonnes per year.
In July 2024, SECI launched a tender under the SIGHT programme to allocate 450,000 metric tonnes per annum (mtpa) of green hydrogen capacity, split into two categories: 410,000 mtpa for technology-agnostic methods and 40,000 mtpa for biomass-based methods. In addition, in June 2024, SECI released another tender under the SIGHT programme for the production and supply of green ammonia through cost-based competitive bidding.
Earlier, in March 2024, SECI issued a tender for 1,500 MW of electrolyser manufacturing capacity, divided into three categories based on technology requirements. The tender received an overwhelming response, with 23 companies bidding for a total of 2,847 MW of annual capacity. Major participants included Adani Enterprises Limited, Avaada Electrolyser Private Limited, Newage Green Electro Private Limited and Waaree Energies Limited.
Going forward, the export of green hydrogen and its derivatives from India should be the focus of the policymakers. Positive trends are emerging in this space, with India and Japan recently signing their first agreement for the export of green ammonia.
The way forward
Detailed plans are being developed for different renewable energy segments to achieve India’s climate goals. In a recent written reply to the Rajya Sabha, Shripad Naik, minister of state for power, noted that the projected generation capacity additions (under construction and identified) by 2032 include at least 80,000 MW of thermal, 25,010 MW of hydro, 14,300 MW of nuclear, 50,760 MW of PSPs, 510 MW of small hydro, 143,980 MW of solar and 23,340 MW of wind. Therefore, the total expected capacity addition by 2032 is 337,900 MW.
To achieve these ambitious targets, the industry is expected to undergo a reset, transitioning from standalone renewable energy projects to hybrid, RTC renewables and firm and despatchable projects. To this end, several auctions have taken place in this space in the past year, with tariffs becoming competitive with conventional power. With storage prices expected to reduce further, RTC renewable energy projects could become the preferred choice and the norm in the power sector – a transformation that is necessary to meet India’s ambitious climate goals.
Sarthak Takyar
