The road to renewable energy is paved with impediments of techno-financial evolution and policy paralysis. Renewables not only face technical challenges, they have big Goliaths betting against them, so what does the future hold for David?
Asia has given some hope to David. India and China are leading with ambitious goals for renewable generation, given that these economies will see the maximum increase in per capita energy consumption over the next 4 decades. It would be a victory for David if they are able to install 30-40% of their projected installed capacity with renewables.
India has shown promise, regarding keeping and making audacious targets for installing renewable energy. Under the leadership of PM Narendra Modi, India has achieved its target of installing 20 GW of solar power by 2022 four years ahead schedule, that target was then revised to 100 GW. Also, in September last year (2019), a new target of installing 450 GW of renewable generation capacity has been set for 2030. India’s current electric grid size (as of January 2019) is around 349 GW, and the renewable capacity is 126.97 GW (with inclusion of Hydro), i.e. 36.15%. If the targets are achieved and based on current trajectory, the country is set to reduce its share of energy produced by coal from 44.3% in 2017 to 38% in 2027, with renewables taking a lead with at least 44% by 2027. Exhibit 1 shows the Projected Electricity Capacity in 2030 for India.
Exhibit 1 Projected Installed Capacity for India in 2030
Source: DRAFT REPORT ON OPTIMAL GENERATION CAPACITY MIX FOR 2029-30
India is on track, at least so far, with its Nationally Determined Commitments (NDC) under the Paris Agreement, and is one of the few to have goals compatible with the “2°C” emissions trajectory scenario. According to Climate Action Tracker – “India has emerged as a global leader in renewable energy, where investments top those into fossil fuel. After adopting its National Electricity Plan (NEP) in 2018, India remains on track to overachieve its “2˚C compatible” rated Paris Agreement climate action targets.”
Exhibit 2 Current policy trajectory for meeting emissions criterion under Paris Agreement for India
Source: Climate Action Tracker
Apart from renewable generation, India is also focusing on reforming the auto sector by introducing reforms to the emissions standards and promoting electric vehicles which would increase the appetite for rooftop solar and electrical energy consumption in general.
But all is not well, the economy has been reeling with a slowdown of late. The banking sector has been hit due to a massive cleanup which saw major bankers engulfed with corruption charges. The Indian authorities claim it to be a cleansing process and experts believe this will impact all sectors including new renewable energy installations until at least the end of this year, with revival by the second quarter of next year.
