A recent report by consulting and accountancy firm EY puts India in the second spot in the renewable energy country attractiveness index, up from the third position it has held for the past two years. China tops the index while the US has moved down to the third spot.
Once a top destination for fossil-fuel investments (recall the decade of the 1990s), India today is witnessing global investment commitments (of the order of almost $100 billion) in its renewable energy sector. Post the Paris COP21 agreement wherein India committed to achieving 175 GW of renewable capacity by 2022, there has been an aggressive surge in activity in the renewable energy sector.
The results have been impressive. For the fiscal year ended March 2017, for the first time, renewable energy capacity additions at 11,320 MW were on par with those in the thermal power sector (of around 11.5 GW). The country’s installed renewable capacity has now crossed the 50 GW milestone. The wind and solar capacities stand at over 30 GW and 10 GW respectively. What is noteworthy is that much of the growth has been market led, unlike European countries where renewables have been dependent on heavy subsidies.
Renewables have now beaten thermal power in terms of costs too. From Rs 18 per unit at the start of the National Solar Mission in 2009, in May this year, solar tariffs exceeded industry expectations to touch a record low of Rs 2.44 per unit in the auction of 200 MW of capacity at Bhadla in Rajasthan. Previously, in April and February this year, solar tariffs had touched Rs 3.15 per unit and Rs 3.30 per unit in two previous auctions (for Kadapa and Rewa). In the wind segment too, tariffs fell to lows of Rs 3.46 per unit in the maiden auction for the segment in February. These tariffs are substantially lower than the tariffs discovered in recent Case 1 tenders in Andhra Pradesh (the L1 bid was Rs 4.27 per unit) and in Kerala (Rs 4.29 per unit). Technological innovations to bring down energy storage costs will help in bringing the cost curve down for renewables further say industry observers.
Clearly, India’s renewable energy market offers all the key ingredients that make for a profitable investment – a strong policy framework, vast renewable energy potential and now, cost economics as well.
In this month’s issue, we present an in-depth review of the renewable energy sector in India.