Powering India’s future
- The Finance Minister announced several measures indicating India’s commitment to its clean energy transition.
- These measures include developing policies on pumped hydro storage, and energy transition pathways to support nuclear energy and energy efficiency.
Clean Energy transition - a Priority
- This is evident from three key milestones India has achieved in the last decade.
- First, near-universal electrification through the Saubhagya scheme, with independent surveys by the Council on Energy, Environment, and Water (CEEW) suggesting that approximately 97% of households were electrified in 2020.
- Second, the country saw a five-fold increase in installed renewable energy (RE) capacity, making India the fourth-largest country globally by RE capacity.
- Third, there was a 40% drop in aggregate losses of power distribution companies (discoms), to an all-time low of about 15% in 2022-23.
- These indicate that the base of the Indian power sector is strengthening.
- However, India confronts challenges in decarbonising its power system at speed and scale while supplying quality and affordable power to consumers.
- Moreover, India’s power sector must prepare for stronger headwinds.
- Our annual electricity demand has been growing by 7-9% every year since the COVID-19 pandemic
- However our peak demand is rising even faster.
- Climate change-induced weather extremes further exacerbate these challenges.
- For discoms, meeting unplanned surges through affordable options and existing network capacity is challenging, resulting in power outages.
Suggestive measures
- First, the government must raise targets for renewable energy and storage systems to go beyond 500 GW in 2030.
- Second, steer faster deployment of diverse clean energy resources.
- In 2023 alone, China added 300 GW of solar and wind capacity, while the European Union added 73 GW.
- As of March, India’s cumulative renewable capacity stood at 144 GW, with another 128 GW in the pipeline.
- This requires tapping the RE potential in more States as well as faster grid connectivity and access to suitable, conflict-free land for the timely commissioning of projects.
- Diversifying from solar energy to other clean technologies would also help India meet its evolving demand.
- Third, implement measures to improve the availability of energy.
- During FY23, only 6.3% of India’s power generation was procured through power exchanges, with the rest coming through bilateral agreements.
- The low liquidity (volume being traded) in the power exchange presents price volatility risks.
- This restricts both buyers and sellers from relying on the exchange for power procurement and value recovery, and in turn, constrains our ability to integrate renewables at scale.
- India needs innovation in bid designs to attract RE developers to sell power in the exchange, besides setting up capacities for long-term contracts.
- Fourth, ensure effective maintenance and utilisation of the coal fleet.
- CEEW’s analysis of MERIT data shows that, in FY24, more than 210 GW of coal capacity generated about 80% of the power during non-solar hours.
- State regulators must revise the norms to enable timely upkeep of the coal fleet and compensate for investments to make select coal plants flexible.
- Finally, fast-track digitalisation to empower discoms and consumers to play an active role in India’s energy transition.
- Smart meters would enable discoms to forecast power demand accurately, plan networks better, and integrate renewables cost-effectively.
- More than 11 million smart meters have already been installed in India, with half of these in Bihar and Assam.
- However, India’s smart metering drive is far from the 250 million target.
- Investing in a cleaner, flexible, and resilient power grid will help our economy grow sustainably and create jobs in the clean energy sectors.