India’s Big Bet on Clean Energy
India has been at the forefront of change concerning the energy sector. Despite the stringent lockdown slowing down its targets, India has since made some big bets towards clean energy and has doubled down its target from 175 GW to 225 GW by 2022 (Source: The Ken). 2020 though proved to be an extremely decisive year for India when it came to clean energy.
Across India, businesses were closed, and the electricity demand reduced significantly (Coal-generated power was down to a record low of 60%). The government saw this opportunity to push its big agenda on renewable energy by awarding flexible renewable energy contracts
- Solar Energy Corporation of India (SECI), publicly owned by the Government of India, in January 2020 concluded a tender for 1.2 GW of renewable energy projects
- SECI again in May 2020 finalized another tender for 400 MW of ’round-the-clock” renewable energy
The above projects will sell renewable energy with an annual capacity of 80% or more for 35% less than the average cost of coal power. Does this mean coal is no more the king? Surprisingly, the answer is a big ‘No’ because, despite India’s accelerated deployment of Solar and Wind power over the past ten years (See Figure below), coal still seems to be the dominant player.
India’s Big Push
India’s electricity appetite is unique compared to the many other countries (both developed and developing). The world bank in 2018 had estimated that India’s power demand would triple by 2040, giving enough scope for innovative energy fulfillment methods – renewables including. The only question that remains (for India and the world) is the scalability factor concerning renewable energy and clean technologies. This is a key factor because India is the second-largest coal-producing and consuming country in the world and the third-largest emitter of greenhouse gasses. So, India moving towards sustainable energy is imperative to lead the global climate change fight.
Indian Prime Minister, Narendra Modi, has been on a renewable energy rally of sorts over the past year. He rallied in the G20 Summit (November 2020) and categorically mentioned that India would not only meet its target of generating 175 GW of renewable energy, rather would surpass it. Post the G20 summit PM had organized a government-sponsored virtual interaction – where global investors were invited and assured of USD 20 BN worth annual generation opportunity. He also inaugurated (December 2020) Asia’s largest solar and wind energy farm in Gujarat, explicitly showcasing the government’s intent to put India firmly on the global renewables radar.
The automobile industry has been one of the biggest beneficiaries of electricity and it is one of the important pillars of economic growth in India. However, the automotive sector suffered massively in production and output and has been reeling since 2019. This void allowed Electric Vehicles (EV) to swing the customer sentiments. The likes of Ather, Hero, and Revolt are cementing their position by providing quality vehicles with value-added services such as lucrative leasing options, IoT-enabled vehicles, real-time battery usage data, etc. Automobile companies are looking to tap into this segment (which is future proof) by investing heavily in technologies that are conducive to the consumers. There has been a large buy-in from the consumers as well – for example – the latest Tata Nexon EV has been a big hit among the city commuters. The EV segment is sure to grow, and the automotive industry is one of the catalysts of growth to India’s Clean Energy Ecosystem. However, pricing is going to be a key factor to determine the future of this industry.
What We Think
Renewable energy companies in India have stepped up in the past year and have won tenders to set-up solar power plants that are in-line with the target of growing solar power generation to 8X by 2022. The downside of this is the kind of storage facilities available post the generation of renewable power. The government is finding ways to tap into this market and encourage new businesses to invest more by providing them structured subsidies. India has just scratched the surface when it comes to clean energy technologies and with more companies investing, it is on the right path of achieving the target of 175GW of renewable energy (which includes 100GW of Solar) output by 2022.
“There’s never been a better time to invest in renewables than now. The cost of adaption has lowered considerably, and with various financing options it has become commercially viable. One such example is the rooftop financing scheme by State Bank India, with low interest rates thanks to backing from World Bank’s Clean Technology Fund.” says Navin Kumar, Managing Director, Navsar Engineering International Pte. Ltd.
Navsar has initiated through its group company ‘Petl’, to provide Commercial & Industrial Solar PV Systems, Electric Vehicle Charging Systems, Home Solar PV Rooftop Power Systems and Solar Agri Systems. Watch out for this space for more interesting updates on Petl.
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Article References: The Ken, Mercom India, Green Tech Media