In a recent interview with Power Line, J.P. Chalasani, group chief executive officer, Suzlon Energy Limited, highlighted the key achievements in the power sector. He also discussed the advancement in the energy transition, the major challenges and the future outlook for the power sector. Edited excerpts from the interview…
How has the sector evolved over time? What have been the key achievements?
Over the past decade, India’s energy sector has undergone a remarkable transformation, with renewable energy emerging as a substantial contributor to meeting the nation’s escalating energy demand. In the past five years, renewable energy capacity addition has surged to an impressive 56,137 MW, surpassing the 14,362 MW increase in fossil fuel capacity. This rapid progress in renewable energy is underscored by the fact that it took approximately 65 years to achieve the first 100 GW of fossil fuel capacity, while the first 100 GW of renewable energy capacity was added in just around 30 years, with a substantial 56 GW being incorporated within the past five years.
This substantial expansion of renewable energy has been made possible, in no small part, due to the remarkable growth in our transmission capacity. Today, India boasts one of the world’s most extensive and intricately connected electricity grids, comprising an impressive 471,817 ckt. km of transmission lines and 1,185,058 MVA of transformation capacity, as of April 2023. In essence, we have evolved into one unified nation, underpinned by a single grid. This monumental stride in our transmission infrastructure has served as a key catalyst for the exponential growth in renewable energy.
While the Indian government has been unceasing in its efforts to bolster the sector’s viability, the results are becoming increasingly, though gradually, evident. Initiatives such as the late payment surcharge scheme, the implementation of payment security measures for drawing power from interstate generating stations, funding tied to enhancing distribution segment efficiency, and the establishment of green open access rules stand testament to the government’s commitment to fostering a conducive environment for the renewable energy sector.
How has the performance of the sector been in advancing the energy transition?
In the past few years, energy transition has gained substantial momentum. The share of renewable energy (excluding large hydro) in the total capacity has experienced an ascent, progressing from 20 per cent to 30 per cent over the past five years. What is noteworthy is our transition from merely generating wind and solar power to effectively fulfilling the requirements for round-the-clock supply and peak power through innovative hybrid plus storage systems. With the right strategic investments and a continued commitment to sustainable practices, India is undeniably well positioned to not only meet but also potentially exceed its ambitious renewable energy targets by 2030.
“The monumental stride in the country’s transmission infrastructure has served as a key catalyst for the exponential growth of renewable energy.”
What is your view on the future energy mix in the country? What should be the key focus areas to achieve the desired energy mix?
The Central Electricity Authority (CEA) has conducted a comprehensive region-wise study of power requirements for the year 2030, encompassing all 8,760 hours of the year. This rigorous analysis has projected a substantial surge in India’s energy needs, calling for an installed capacity of 777 GW, a significant jump from the current 415 GW. Moreover, energy demand is estimated to reach a staggering 2,441 BUs, compared to the current level of 1,624 BUs.
To fulfil this increasing demand in the most economically efficient manner, it is projected that by 2030, India should aim for a solar capacity of 293 GW, up from the current 67 GW. Additionally, wind capacity should be augmented to 100 GW from the existing 43 GW, and battery storage capacity should reach 42 GW. This concerted effort is expected to propel renewable energy’s contribution to the overall energy mix to an impressive 32 per cent by 2030.
In striving to attain these ambitious targets, there are several crucial focal points that need to be addressed. These include prioritising infrastructure development for the timely execution of projects, ensuring policy stability, sustaining the emphasis on bolstering domestic manufacturing capabilities, securing adequate funding from banks and financial institutions and implementing strategies to significantly enhance the skilled workforce in the renewable energy sector, among other critical factors.
What are the biggest challenges facing the sector? How can these be resolved?
The critical issue of sector viability remains paramount. We are yet to achieve tariffs that accurately reflect costs, primarily due to the lingering impact of socio-political factors on the power sector. The disparity between average revenue realisation and average cost of supply continues to be alarmingly negative. Furthermore, the lack of definitive policies from discoms concerning matters such as open access and banking charges poses a significant obstacle to investments in the commercial and industrial and captive segments. The challenge of maintaining grid stability amidst the substantial renewable energy capacity addition persists.
It is imperative to intensify our focus on reforms in the distribution segment – with political will to drive change. The privatisation of Delhi’s distribution system stands as a remarkable example, yielding unprecedented results. Consequently, it is imperative to undertake further initiatives aimed at involving the private sector in the distribution space.
As we witness the substantial penetration of renewable energy, addressing the issue of variability demands heightened attention. Prioritising large-scale battery manufacturing, a substantial ramp-up in pumped storage schemes, and the seamless integration of thermal generation with renewable energy sources should feature prominently on the generation agenda. Simultaneously, we must accelerate efforts on the demand side through measures such as time-of-day tariffs and widespread adoption of smart metering technologies.
“In the retail distribution segment, we can expect a series of incremental measures aimed at enhancing commercial viability. Initiatives such as time-of-day tariffs and the widespread adoption of smart metering technologies are on the cusp of becoming a tangible reality.”
What is your outlook for the sector for the near to medium term?
In the near to medium term, we anticipate a sustained momentum in renewable energy capacity expansion. This growth will not only stem from the conventional bidding and utility PPA routes but will also be driven by substantial demand emanating from large industrial clients. These industries are actively transitioning from fossil fuel-based captive plants to embracing renewable sources or establishing entirely new captive capacities rooted in renewables. Beyond the obvious cost advantages, this strategic shift substantially diminishes their carbon footprint, aligning with environmental sustainability goals and reaping commensurate benefits. Furthermore, green hydrogen projects are likely to generate substantial demand and hold great potential for transforming the energy landscape.
Within the retail distribution segment, we can expect to witness a series of incremental measures aimed at enhancing commercial viability. Initiatives such as ToD tariffs and the widespread adoption of smart metering technologies are on the cusp of becoming a tangible reality.
Having nurtured an optimistic outlook on the power sector for over four decades, I find my optimism has now ascended to even greater heights.
“Prioritising large-scale battery manufacturing, a substantial ramp-up in pumped storage schemes, and the seamless integration of thermal generation with renewable energy sources should feature prominently on the generation agenda.”