India’s green energy transition: Indian conglomerates have been diversifying into the clean energy sector, focusing on sectors such as solar power and green hydrogen. Some of India’s largest corporates, including Reliance Industries, JSW Group, and Larsen & Toubro (L&T) are poised to commission or commercially launch the first phase of their green energy projects this year.
The entry of major players into the energy sector marks a significant turning point as India stands on the brink of a green energy revolution. With the nation undergoing an energy transition, these firms aim to capitalise on emerging opportunities. Mukesh Ambani, chairman and managing director of RIL, highlighted this potential in the company’s FY22 annual report, saying that green energy could surpass the performance of all the company’s existing growth engines within five to seven years.
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For the energy sector to thrive, both private sector initiatives and government support are essential. This collaboration promises a win-win scenario for all stakeholders.
Clean energy projects – a report card
India, home to 83 of the world’s most polluted cities and facing rapidly growing energy demands, urgently needs a clean energy transition. The stakes are high, as climate change threatens agriculture, water resources, and coastal communities. Rising temperatures and erratic rainfall endanger food security in the world’s most populous nation.
Harnessing clean energy is both an environmental imperative and an economic necessity. From wind-swept plains to solar-drenched arid regions and the promise of nuclear power, India is exploring all avenues. Currently ranked fourth globally in renewable energy capacity, India’s solar power sector has grown at a remarkable 36.5% CAGR over the past decade.
The government has outlined ambitious investments in green hydrogen, electric vehicles, solar rooftops, and energy storage systems to achieve net-zero emissions. However, despite impressive progress, the road to achieving 1 TW of renewable energy capacity by 2030 presents significant challenges.
The coal conundrum
Moreover, India still grapples with coal dependence and around 70% of electricity generation (not capacity) continues to be thermal power, generated from a fossil fuel which is found in abundance in the country. While India has pledged to phase-down its usage, it is a long journey and not a near-term goal. Despite India’s ambitious clean energy goals, the capacity of coal sector will grow by another 80 GW by the starting of the next decade.
Simply put, even as renewable energy capacity races ahead of targets, 40% of total energy generation will continue to be coal powered in 2030. It will take several decades before the share and quantum of thermal power will decline. Mitigating the impact of coal power generation must remain topmost priority of the government and policymakers.
Challenges to Clean Energy Ambitions
Availability of land: Land acquisition remains a complex and time-consuming process in India. Outdated ownership records and nascent digitisation efforts exacerbate this issue. To add nearly 800 GW of renewable energy capacity in the coming decade, massive collaboration between central and state governments will be required. One solution lies in utilising wastelands for renewable energy projects. According to the Wasteland Atlas of India, 17% of the country’s landmass is classified as wasteland and could be assessed for renewable energy deployment.
Power evacuation infrastructure: While renewable energy capacity, particularly solar, has seen rapid growth, the expansion of transmission infrastructure has lagged. States like Rajasthan, rich in solar resources, face grid connectivity challenges. High-Voltage Direct Current (HVDC) technology, essential for long-distance transmission, has been delayed due to global supply chain constraints and limited manufacturing capacity.
To address this, India must explore short- to medium-term imports with safeguards for network security, deepen engagement with non-Chinese suppliers for long-term demand, and incentivise public sector undertakings such as Bharat Heavy Electricals Ltd (BHEL) to invest in HVDC manufacturing through joint ventures.
Availability of funds: India’s clean energy transition requires investments of $350-400 billion over the next decade. An EY report titled Powering the Future: India’s Role in Global Energy Transition estimates annual investment needs of $150-200 billion for rapid decarbonisation. Without a diversified base of lenders, equity investors, and capital providers, India risks a financial shortfall that could derail its renewable energy goals.
Inconsistent policies: Policy inconsistency is a major impediment. Abrupt changes, such as the imposition of safeguard duties, basic customs duties, and increased GST rates, disrupt industry plans. Some governments have even cancelled contracts, only to reinstate them following court intervention. A stable regulatory framework, sustained for 5-10 years, is essential to provide businesses with the certainty needed for long-term investments.
Future of green energy transition
India’s commitment to reducing carbon emissions by 1 billion tonnes by 2030 and achieving net-zero by 2070 requires a tripartite effort: the government, private sector, and citizens must work together. To overcome the challenges ahead, India must streamline land acquisition processes and assess wasteland suitability, expand transmission infrastructure with targeted investments and partnerships, secure diversified financial resources to fund renewable energy projects, and implement consistent, long-term policy frameworks to build industry confidence.
India’s green energy journey holds immense potential not only to address environmental concerns but also to position the nation as a global leader in the clean energy revolution. The coming years will determine whether this potential is realised.