Energy Transition Strategy: Action plan for decarbonising the power sector

Action plan for decarbonising the power sector

By Reji Kumar Pillai, President, India Smart Grid Forum, and Chairman, Global Smart Energy Federation

The context

The Kyoto Protocol of 1997 mandated emission reduction targets only for developed nations while allowing developing countries with low per capita emissions to take a voluntary approach towards their emission reduction targets from a “climate justice” standpoint. Noth­ing substantial has been achieved of the agreed emission reduction commitments made by developed nations nor has the promised assistance ($100 billion per year) to developing countries been delivered. However, what is heartening is the major technological developments that have taken place in renewable energy and energy storage (lithium-ion batteries) in the past two deca­des, which are making it attractive for all countries to adopt low-carbon development pathways. Globally today, solar and wind power are cheaper than electricity produced from new coal-based power plants. Countries like India that are likely to face serious repercussions due to global warming should decarbonise their energy sector on a fast track. While several recently published reports and studies have proposed a “net zero” emissions goal for India by 2050, 2060, 2070, etc., this paper recommends a clearly achievable action plan to decarbonise the power sector at marginal or no additional investments.

The lion’s share of India’s energy requirement is currently met by fossil fuels. According to the International Energy Agency (IEA) Energy Outlook 2021, the share of coal in India’s energy mix has gone up from 33 per cent in 2000 to 44 per cent in 2021. Coal consumption in the existing policy scenario is ex­pected to increase from 590 million tonnes (mt) in 2019 to 772 mt by 2040. Similarly, India’s oil demand is expected to in­crease by 74 per cent to 8.7 million barrels per day by 2040 un­der the existing policy scenario. With the increased consumption of coal and oil, greenhouse gas (GHG) emissions have also increased by 46 per cent between 2013 and 2020. This is a major concern considering the nationally determined contribution (NDC) target committed to under the Paris Agreement at  33-35 per cent reduction in emission intensity by 2030 over the 2005 levels. Therefore, to reduce GHG emissions and achieve the NDC target of 40 per cent non-fossil fuel share in total power generation, the Government of India has set a new target of 450 GW1 of renewable energy by 2030. This consists of 280 GW of solar, 140 GW of wind, and 30 GW of small-hydro, biomass, and other resources.

According to the latest IEA projections, India’s power system is set to grow from its present capacity of 395 GW to 823 GW by 2030, and to 1,584 GW by 2040. Out of 1,584 GW, 869 GW is ex­pec­ted to be contributed by renewable energy sources. Con­side­ring this large share of renewable energy in the generation portfolio, the IEA estimates a flexibility of ±85 per cent for India’s po­wer system by 2040, which will be a huge challenge to manage. All grid modernisation efforts being undertaken henceforth sh­o­uld be designed to enhance the flexibility of the power system.

Energy transition strategy and road map for India

The scenario described above underscores the urgency for India to adopt a pragmatic energy transition strategy and a well-de­fined roadmap to accelerate the scaling up of renewable energy sources to meet the country’s increasing power requirements as well as to phase out coal plants and diesel generator (DG) sets. The energy transition strategy should be developed with the aim of achieving the following goals: increased renewable energy supply and use; reduced use of coal and oil; increa­sed electrification in the areas of mobility, cooking and agriculture; increased use of renewables for mobility; increased energy efficiency; and dynamic renewable energy markets.

The key approaches for achieving the above objectives are briefly described in the following paragraphs.

  • Build distributed energy storage systems (ESSs) across the co­untry through sustainable business models so that rene­w­able energy can be scaled up and be available round the clock: The following approaches may be considered – insta­lla­tion of battery energy storage systems (BESSs) at solar and wind farms; solarisation of irrigation pump sets with BESS; replacement of DG sets with BESS; and building district cooling systems (DCSs) with thermal ESSs. According to some estimates, there are over 70 GW of large-size DG sets in India. With diesel at Rs 95 per litre, one unit of electricity from a DG set will cost Rs 29.07 whereas power from a BESS will cost Rs 15.40 per kWh2. The replacement of DG sets that are distribu­t­ed across the country with BESS is the fastest and cheapest ro­ute to build flexibility in the Indian grid and reduce emissions.
  • Instead of each building having its own centralised air-conditioning plant, a group of buildings in a commercial complex, housing colony, or street could have a common cooling system and could provide cooling as a service to consumers for a monthly fee. DCSs have been successfully implemented in several cities (including GIFT City in Gujarat) arou­nd the world. A typical DCS incorporates insulated tanks for storing chilled water (thermal storage). This is a great asset to the distribution grid because it provides flexibility in services – load relief during peak hours and load delivery when surplus generation is available3.
  • The formulation of innovative policies and schemes to unleash a solar photovoltaic (PV) revolution in the country for solar rooftop PV (RTPV), building integrated PV, floating solar PV on all feasible waterbodies, and agrivoltaics or the installation of ground-mounted solar panels in agricultural fields by raising the height of support structures.
  • The present architecture of transmission and distribution grids remains unchanged and is a legacy of the 20th century, based on the fundamental concepts of “one-way flow of electricity” and “electricity cannot be stored”. Today, with distributed energy resources, ESSs, prosumers and electric vehicles (EVs) connected to the distribution grid, this grid architecture needs to be redesigned to support bidirectional energy flows.
  • EV-grid integration and aggregation of EVs connected to the grid as virtual power plants offering ancillary services: Vehicle-to-grid technologies and standards are maturing. Both EVs and RTPVs are connected to the low voltage grid, and grid-connected EVs can mitigate the variability of RTPV generation during the day as well as store surplus generation in EV batteries and pump back this energy into the grid during peak hours.
  • Promotion of renewable energy for EV charging through innovative business models to decarbonise the transport sector.
  • Promotion of all potential forms of ancillary services, including ESSs and EVs, through appropriate business models.
  • Enhancing the flexibility of the grid to integrate larger amou­nts of renewable energy through a redesigned grid ar­chi­tecture that is capable of handling bidirectional flows of energy and information, and the adoption of innovative policies and regulations contributing to demand flexibility as well as supply-side flexibility.
  • Promotion of electric cooking through incentives for cooking during periods of surplus generation of renewable energy: Having electrified almost all households in the country, and with surplus electricity generation capacity, India should actively promote electric cooking. As of 2019, 63 per cent of rural households and 18 per cent of urban households in India used firewood, dung cakes, or biomass for cooking. To meet the 2030 NDC targets committed by India, emissions from kitchens must be reduced drastically, and electric cooking is the least-cost and fastest route to achieving this goal4.
  • Adoption of innovative tariff policies such as time-of-use tariffs that incentivise customers to participate in de­mand management programmes, including demand res­ponse.
  • Promotion of smart microgrids: Large buildings and campuses could be converted into smart microgrids that can be islanded from the main grid whenever required.
  • Promotion of green hydrogen generation: The Government of India plans to launch a Hydrogen Mission with the ambitious target of setting up green hydrogen generation facilities. GW-scale electrolyser plants for the generation of green hydrogen can be switched off to provide load relief to the grid whenever required, and these plants can also be run at varying capacities depending on generation availability. GW-scale electrolysers are very good sources for enhancing the flexibility of the grid to scale up renewable energy integration. With increased production of green hydrogen, the commercial feasibility of fuel cell-based distributed generation sources can also be explored.
  • Promotion of smart appliances: All electrical equipment and appliances can be made smart and grid-interactive. Smart app­liances could buy the cheapest and green electricity from the grid and run their operations as programmed. We should ban the production and sale of inefficient equipment and appliances in a phased manner.
  • Retrofitting of thermal plants: Thermal power plants could be retrofitted to run as flexible power plants to address the variability of solar and wind energy and to avoid the curtailment of renewable energy generation.
  • Promotion of dynamic energy markets and peer-to-peer trading of green electricity among prosumers and consumers: This can be done efficiently on blockchain platforms.
  • Retirement of coal-based plants: India needs to prepare a well-thought-out and comprehensive plan for the retirement of thermal power plants each year and for finding efficient and commercially viable alternatives to substitute the energy that was previously produced by decommissioned plants.


In this process of energy transition, with more and more distributed energy resources being connected to medium voltage and low voltage grids, the real action is moving from generation and transmission utilities to distribution utilities. Hence, distribution utilities need to undergo a 360-degree overhaul, from their technological capabilities to their managerial and financial expertise. The distribution grid needs to be modernised through the adoption of advanced technologies that support the bidirectional flow of electricity; monitor and control power flows in real time at the appliance level; and leverage artificial intelligence, machine learning and robotics to process the humongous amounts of data gathered in real time to optimise operations and to predict events. Today’s technologies could achieve all that has been described above if we have the will to follow through as well as a meticulous  roadmap to steer us forward.

  1. CEA optimal mix report 2029-30
  2. ISGF White Paper on DG Replacement with Lithium-Ion Batteries in Commercial Buildings
  3. ISGF White Paper on Sustainable Air Conditioning with District Cooling Systems
  4. ISGF White Paper Electric Cooking