Renewable energy in India has taken centre stage when it comes to the significant development of energy infrastructure required to achieve India’s economic goals.
In 2016, the Indian government set a target of 175 gigawatts (GW) of renewable energy by financial year (FY) 2021/22 and 275GW by FY2026/27 to transform the power sector from an expensive, unreliable, and polluting fossil fuels-based system into a low-cost, reliable, and low-emission system. In February 2019, the Central Electricity Authority increased the target to 450GW of renewable energy by 2030’.1
So far, India’s electricity sector transition has had a promising start, assisted by lower costs for solar and wind energy generation equipment, cheaper financing, and a favourable policy environment.
In March 2020, India’s on-grid renewable energy capacity stood at 87GW. Of the 30GW of renewable energy capacity installed since the beginning of FY2017/18, coupled with an additional 50GW awarded to date, more than 90% has been contracted at tariffs ranging between Rs2.43-2.80/kilowatt hour (kWh) (~US$35- 40/MWh) with zero indexation for 25 years. This is 60% to70% less than the first- year tariff set for proposed new non-mine mouth coal-fired power plants in India.
Issues With Ultra Mega Solar Parks
As much as the scale and execution of a large-scale solar park exemplifies India’s technological ingenuity to mobilise capital at scale and at the least cost, it must be acknowledged that it comes with its own set of negative externalities.
Solar parks are land-intensive, and they pose a resource availability challenge for a densely populated country. However, we note the total land required for solar parks is equivalent to the total land required for coal-fired power plants and associated coal mines.
The government should carefully study all options before making plans for new solar parks in future. Wastelands, low-utility non-agricultural land, or reclaimed coal mines should ideally be used for large-scale solar projects.
The Indian solar construction industry is highly dependent on low-skilled interstate migrant labour and informal employment most of the time. The government could progressively look to execute industry-specific labour reforms for the renewable
26 Mercom India. Gujarat Invites Bids for 950 MW of Projects to be Developed Across Two of its Solar Parks. 25 June 2019.
27 Mercom India, Gujarat Reissues 700 MW from its 1 GW Solar Tender for Dholera Solar Park, 18 March 2020.
28 ET EnergyWorld, NTPC plans 5,000MW ultra-mega solar plant in Kucth worth Rs20,000 crore investment, 20 August 2019.
29 ET EnergyWorld, Gujarat leads India in approved capacity of solar parks, 7 August 2018.
India Is Home to the World’s Largest
Utility-Scale Solar Installations 12
energy industry to reap long-term benefits from the growth industry of the decade.
Large-scale solar parks are not as easy to operate as decentralised solar systems for grid operators. Large-scale input of power from utility-scale generators is harder for grid stability management from the perspective of the grid operator as it must deal with large voltage and frequency fluctuations because of the intermittent nature of renewables. India’s rooftop solar market has been slower to reach scale in the Indian market, but is finding its feet with more than 5GW of total installed capacity to date.
India has actively looked into various solution to expand its decentralised solar capacity. There have been gigawatt-scale planning and some small installations of floating solar. In addition, government-owned buildings such as offices, hospitals and education facilities are being used to accommodate rooftop solar projects.
India has been growing its grid capacity roughly in step with new generation capacity. India’s grid network successfully managed reduction and consequent increase of 31GW demand within a period of 9 minutes during the recent ‘lights off’ event on 5th April 2020.30 31 This demonstration of grid management supports the argument that with the right planning and additional investment in firming capacity, India’s robust national electricity grid could be further developed to handle large- scale renewable integration.
It is worth looking back over the last four years to see just how far the Indian renewable energy industry has advanced. Indian utility-scale solar parks have been effective in kickstarting India’s energy sector transition. The ultra-mega solar parks have attracted foreign capital as well as top global developers to India, and in return have provided investors with an opportunity to join a US$500-700bn renewable energy and grid infrastructure investment boom in the coming decade.
India’s power industry and the government should make good use of the coronavirus lockdown period to resolve long-standing problems and to be fully prepared for a green infrastructure investment stimulus as India comes out of this pandemic. India should rightly take pride in being able to execute world-leading renewable energy projects and continue to work to resolve short-term policy impediments to achieving its long-term renewable energy aspirations.
The government must also address development-related negative social and economic externalities. It must avoid the mistakes made in the past with large-scale coal mine and thermal power plant development, particularly in terms of development on key agricultural lands and critical forestry reserves.