write a case study about renewable energy conducted in india

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• Published: 07 January 2020

Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities

• Charles Rajesh Kumar. J   ORCID: orcid.org/0000-0003-2354-6463 1 &
• M. A. Majid 1  

Energy, Sustainability and Society volume  10 , Article number:  2 ( 2020 ) Cite this article

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The primary objective for deploying renewable energy in India is to advance economic development, improve energy security, improve access to energy, and mitigate climate change. Sustainable development is possible by use of sustainable energy and by ensuring access to affordable, reliable, sustainable, and modern energy for citizens. Strong government support and the increasingly opportune economic situation have pushed India to be one of the top leaders in the world’s most attractive renewable energy markets. The government has designed policies, programs, and a liberal environment to attract foreign investments to ramp up the country in the renewable energy market at a rapid rate. It is anticipated that the renewable energy sector can create a large number of domestic jobs over the following years. This paper aims to present significant achievements, prospects, projections, generation of electricity, as well as challenges and investment and employment opportunities due to the development of renewable energy in India. In this review, we have identified the various obstacles faced by the renewable sector. The recommendations based on the review outcomes will provide useful information for policymakers, innovators, project developers, investors, industries, associated stakeholders and departments, researchers, and scientists.

Introduction

The sources of electricity production such as coal, oil, and natural gas have contributed to one-third of global greenhouse gas emissions. It is essential to raise the standard of living by providing cleaner and more reliable electricity [ 1 ]. India has an increasing energy demand to fulfill the economic development plans that are being implemented. The provision of increasing quanta of energy is a vital pre-requisite for the economic growth of a country [ 2 ]. The National Electricity Plan [NEP] [ 3 ] framed by the Ministry of Power (MoP) has developed a 10-year detailed action plan with the objective to provide electricity across the country, and has prepared a further plan to ensure that power is supplied to the citizens efficiently and at a reasonable cost. According to the World Resource Institute Report 2017 [ 4 , 5 ], India is responsible for nearly 6.65% of total global carbon emissions, ranked fourth next to China (26.83%), the USA (14.36%), and the EU (9.66%). Climate change might also change the ecological balance in the world. Intended Nationally Determined Contributions (INDCs) have been submitted to the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. The latter has hoped to achieve the goal of limiting the rise in global temperature to well below 2 °C [ 6 , 7 ]. According to a World Energy Council [ 8 ] prediction, global electricity demand will peak in 2030. India is one of the largest coal consumers in the world and imports costly fossil fuel [ 8 ]. Close to 74% of the energy demand is supplied by coal and oil. According to a report from the Center for monitoring Indian economy, the country imported 171 million tons of coal in 2013–2014, 215 million tons in 2014–2015, 207 million tons in 2015–2016, 195 million tons in 2016–2017, and 213 million tons in 2017–2018 [ 9 ]. Therefore, there is an urgent need to find alternate sources for generating electricity.

In this way, the country will have a rapid and global transition to renewable energy technologies to achieve sustainable growth and avoid catastrophic climate change. Renewable energy sources play a vital role in securing sustainable energy with lower emissions [ 10 ]. It is already accepted that renewable energy technologies might significantly cover the electricity demand and reduce emissions. In recent years, the country has developed a sustainable path for its energy supply. Awareness of saving energy has been promoted among citizens to increase the use of solar, wind, biomass, waste, and hydropower energies. It is evident that clean energy is less harmful and often cheaper. India is aiming to attain 175 GW of renewable energy which would consist of 100 GW from solar energy, 10 GW from bio-power, 60 GW from wind power, and 5 GW from small hydropower plants by the year 2022 [ 11 ]. Investors have promised to achieve more than 270 GW, which is significantly above the ambitious targets. The promises are as follows: 58 GW by foreign companies, 191 GW by private companies, 18 GW by private sectors, and 5 GW by the Indian Railways [ 12 ]. Recent estimates show that in 2047, solar potential will be more than 750 GW and wind potential will be 410 GW [ 13 , 14 ]. To reach the ambitious targets of generating 175 GW of renewable energy by 2022, it is essential that the government creates 330,000 new jobs and livelihood opportunities [ 15 , 16 ].

A mixture of push policies and pull mechanisms, accompanied by particular strategies should promote the development of renewable energy technologies. Advancement in technology, proper regulatory policies [ 17 ], tax deduction, and attempts in efficiency enhancement due to research and development (R&D) [ 18 ] are some of the pathways to conservation of energy and environment that should guarantee that renewable resource bases are used in a cost-effective and quick manner. Hence, strategies to promote investment opportunities in the renewable energy sector along with jobs for the unskilled workers, technicians, and contractors are discussed. This article also manifests technological and financial initiatives [ 19 ], policy and regulatory framework, as well as training and educational initiatives [ 20 , 21 ] launched by the government for the growth and development of renewable energy sources. The development of renewable technology has encountered explicit obstacles, and thus, there is a need to discuss these barriers. Additionally, it is also vital to discover possible solutions to overcome these barriers, and hence, proper recommendations have been suggested for the steady growth of renewable power [ 22 , 23 , 24 ]. Given the enormous potential of renewables in the country, coherent policy measures and an investor-friendly administration might be the key drivers for India to become a global leader in clean and green energy.

Projection of global primary energy consumption

An energy source is a necessary element of socio-economic development. The increasing economic growth of developing nations in the last decades has caused an accelerated increase in energy consumption. This trend is anticipated to grow [ 25 ]. A prediction of future power consumption is essential for the investigation of adequate environmental and economic policies [ 26 ]. Likewise, an outlook to future power consumption helps to determine future investments in renewable energy. Energy supply and security have not only increased the essential issues for the development of human society but also for their global political and economic patterns [ 27 ]. Hence, international comparisons are helpful to identify past, present, and future power consumption.

Table 1 shows the primary energy consumption of the world, based on the BP Energy Outlook 2018 reports. In 2016, India’s overall energy consumption was 724 million tons of oil equivalent (Mtoe) and is expected to rise to 1921 Mtoe by 2040 with an average growth rate of 4.2% per annum. Energy consumption of various major countries comprises commercially traded fuels and modern renewables used to produce power. In 2016, India was the fourth largest energy consumer in the world after China, the USA, and the Organization for economic co-operation and development (OECD) in Europe [ 29 ].

The projected estimation of global energy consumption demonstrates that energy consumption in India is continuously increasing and retains its position even in 2035/2040 [ 28 ]. The increase in India’s energy consumption will push the country’s share of global energy demand to 11% by 2040 from 5% in 2016. Emerging economies such as China, India, or Brazil have experienced a process of rapid industrialization, have increased their share in the global economy, and are exporting enormous volumes of manufactured products to developed countries. This shift of economic activities among nations has also had consequences concerning the country’s energy use [ 30 ].

Projected primary energy consumption in India

The size and growth of a country’s population significantly affects the demand for energy. With 1.368 billion citizens, India is ranked second, of the most populous countries as of January 2019 [ 31 ]. The yearly growth rate is 1.18% and represents almost 17.74% of the world’s population. The country is expected to have more than 1.383 billion, 1.512 billion, 1.605 billion, 1.658 billion people by the end of 2020, 2030, 2040, and 2050, respectively. Each year, India adds a higher number of people to the world than any other nation and the specific population of some of the states in India is equal to the population of many countries.

The growth of India’s energy consumption will be the fastest among all significant economies by 2040, with coal meeting most of this demand followed by renewable energy. Renewables became the second most significant source of domestic power production, overtaking gas and then oil, by 2020. The demand for renewables in India will have a tremendous growth of 256 Mtoe in 2040 from 17 Mtoe in 2016, with an annual increase of 12%, as shown in Table 2 .

Table 3 shows the primary energy consumption of renewables for the BRIC countries (Brazil, Russia, India, and China) from 2016 to 2040. India consumed around 17 Mtoe of renewable energy in 2016, and this will be 256 Mtoe in 2040. It is probable that India’s energy consumption will grow fastest among all major economies by 2040, with coal contributing most in meeting this demand followed by renewables. The percentage share of renewable consumption in 2016 was 2% and is predicted to increase by 13% by 2040.

How renewable energy sources contribute to the energy demand in India

Even though India has achieved a fast and remarkable economic growth, energy is still scarce. Strong economic growth in India is escalating the demand for energy, and more energy sources are required to cover this demand. At the same time, due to the increasing population and environmental deterioration, the country faces the challenge of sustainable development. The gap between demand and supply of power is expected to rise in the future [ 32 ]. Table 4 presents the power supply status of the country from 2009–2010 to 2018–2019 (until October 2018). In 2018, the energy demand was 1,212,134 GWh, and the availability was 1,203,567 GWh, i.e., a deficit of − 0.7% [ 33 ].

According to the Load generation and Balance Report (2016–2017) of the Central Electricity Authority of India (CEA), the electrical energy demand for 2021–2022 is anticipated to be at least 1915 terawatt hours (TWh), with a peak electric demand of 298 GW [ 34 ]. Increasing urbanization and rising income levels are responsible for an increased demand for electrical appliances, i.e., an increased demand for electricity in the residential sector. The increased demand in materials for buildings, transportation, capital goods, and infrastructure is driving the industrial demand for electricity. An increased mechanization and the shift to groundwater irrigation across the country is pushing the pumping and tractor demand in the agriculture sector, and hence the large diesel and electricity demand. The penetration of electric vehicles and the fuel switch to electric and induction cook stoves will drive the electricity demand in the other sectors shown in Table 5 .

According to the International Renewable Energy Agency (IRENA), a quarter of India’s energy demand can be met with renewable energy. The country could potentially increase its share of renewable power generation to over one-third by 2030 [ 35 ].

Table 6 presents the estimated contribution of renewable energy sources to the total energy demand. MoP along with CEA in its draft national electricity plan for 2016 anticipated that with 175 GW of installed capacity of renewable power by 2022, the expected electricity generation would be 327 billion units (BUs), which would contribute to 1611 BU energy requirements. This indicates that 20.3% of the energy requirements would be fulfilled by renewable energy by 2022 and 24.2% by 2027 [ 36 ]. Figure 1 shows the ambitious new target for the share of renewable energy in India’s electricity consumption set by MoP. As per the order of revised RPO (Renewable Purchase Obligations, legal act of June 2018), the country has a target of a 21% share of renewable energy in its total electricity consumption by March 2022. In 2014, the same goal was at 15% and increased to 21% by 2018. It is India’s goal to reach 40% renewable sources by 2030.

Target share of renewable energy in India’s power consumption

Estimated renewable energy potential in India

The estimated potential of wind power in the country during 1995 [ 37 ] was found to be 20,000 MW (20 GW), solar energy was 5 × 10 15 kWh/pa, bioenergy was 17,000 MW, bagasse cogeneration was 8000 MW, and small hydropower was 10,000 MW. For 2006, the renewable potential was estimated as 85,000 MW with wind 4500 MW, solar 35 MW, biomass/bioenergy 25,000 MW, and small hydropower of 15,000 MW [ 38 ]. According to the annual report of the Ministry of New and Renewable Energy (MNRE) for 2017–2018, the estimated potential of wind power was 302.251 GW (at 100-m mast height), of small hydropower 19.749 GW, biomass power 17.536 GW, bagasse cogeneration 5 GW, waste to energy (WTE) 2.554 GW, and solar 748.990 GW. The estimated total renewable potential amounted to 1096.080 GW [ 39 ] assuming 3% wasteland, which is shown in Table 7 . India is a tropical country and receives significant radiation, and hence the solar potential is very high [ 40 , 41 , 42 ].

Gross installed capacity of renewable energy in India

As of June 2018 reports, the country intends to reach 225 GW of renewable power capacity by 2022 exceeding the target of 175 GW pledged during the Paris Agreement. The sector is the fourth most attractive renewable energy market in the world. As in October 2018, India ranked fifth in installed renewable energy capacity [ 43 ].

Gross installed capacity of renewable energy—according to region

Table 8 lists the cumulative installed capacity of both conventional and renewable energy sources. The cumulative installed capacity of renewable sources as on the 31 st of December 2018 was 74081.66 MW. Renewable energy (small hydropower, wind, biomass, WTE, solar) accounted for an approximate 21% share of the cumulative installed power capacity, and the remaining 78.791% originated from other conventional sources (coal, gas diesel, nuclear, and large hydropower) [ 44 ]. The best regions for renewable energy are the southern states that have the highest solar irradiance and wind in the country. When renewable energy alone is considered for analysis, the Southern region covers 49.121% of the cumulative installed renewable capacity, followed by the Western region (29.742%), the Northern region (18.890%), the Eastern region (1.836%), the North-Easter region 0.394%, and the Islands (0.017%). As far as conventional energy is concerned, the Western region with 33.452% ranks first and is followed by the Northern region with 28.484%, the Southern region (24.967%), the Eastern region (11.716%), the Northern-Eastern (1.366%), and the Islands (0.015%).

Gross installed capacity of renewable energy—according to ownership

State government, central government, and private players drive the Indian energy sector. The private sector leads the way in renewable energy investment. Table 9 shows the installed gross renewable energy and conventional energy capacity (percentage)—ownership wise. It is evident from Fig. 2 that 95% of the installed renewable capacity derives from private companies, 2% from the central government, and 3% from the state government. The top private companies in the field of non-conventional energy generation are Tata Power Solar, Suzlon, and ReNew Power. Tata Power Solar System Limited are the most significant integrated solar power players in the country, Suzlon realizes wind energy projects, and ReNew Power Ventures operate with solar and wind power.

Gross renewable energy installed capacity (percentage)—Ownership wise as per the 31.12.2018 [ 43 ]

Gross installed capacity of renewable energy—state wise

Table 10 shows the installed capacity of cumulative renewable energy (state wise), out of the total installed capacity of 74,081.66 MW, where Karnataka ranks first with 12,953.24 MW (17.485%), Tamilnadu second with 11,934.38 MW (16%), Maharashtra third with 9283.78 MW (12.532%), Gujarat fourth with 10.641 MW (10.641%), and Rajasthan fifth with 7573.86 MW (10.224%). These five states cover almost 66.991% of the installed capacity of total renewable. Other prominent states are Andhra Pradesh (9.829%), Madhya Pradesh (5.819%), Telangana (5.137%), and Uttar Pradesh (3.879%). These nine states cover almost 91.655%.

Gross installed capacity of renewable energy—according to source

Under union budget of India 2018–2019, INR 3762 crore (USD 581.09 million), was allotted for grid-interactive renewable power schemes and projects. As per the 31.12.2018, the installed capacity of total renewable power (excluding large hydropower) in the country amounted to 74.08166 GW. Around 9.363 GW of solar energy, 1.766 GW of wind, 0.105 GW of small hydropower (SHP), and biomass power of 8.7 GW capacity were added in 2017–2018. Table 11 shows the installed capacity of renewable energy over the last 10 years until the 31.12.2018. Wind energy continues to dominate the countries renewable energy industry, accounting for over 47% of cumulative installed renewable capacity (35,138.15 MW), followed by solar power of 34% (25,212.26 MW), biomass power/cogeneration of 12% (9075.5 MW), and small hydropower of 6% (4517.45 MW). In the renewable energy country attractiveness index (RECAI) of 2018, India ranked in fourth position. The installed renewable energy production capacity has grown at an accelerated pace over the preceding few years, posting a CAGR of 19.78% between 2014 and 2018 [ 45 ] .

Estimation of the installed capacity of renewable energy

Table 12 gives the share of installed cumulative renewable energy capacity, in comparison with the installed conventional energy capacity. In 2022 and 2032, the installed renewable energy capacity will account for 32% and 35%, respectively [ 46 , 47 ]. The most significant renewable capacity expansion program in the world is being taken up by India. The government is preparing to boost the percentage of clean energy through a tremendous push in renewables, as discussed in the subsequent sections.

Gross electricity generation from renewable energy in India

The overall generation (including the generation from grid-connected renewable sources) in the country has grown exponentially. Between 2014–2015 and 2015–2016, it achieved 1110.458 BU and 1173.603 BU, respectively. The same was recorded with 1241.689 BU and 1306.614 BU during 2015–2016 and 1306.614 BU from 2016–2017 and 2017–2018, respectively. Figure 3 indicates that the annual renewable power production increased faster than the conventional power production. The rise accounted for 6.47% in 2015–2016 and 24.88% in 2017–2018, respectively. Table 13 compares the energy generation from traditional sources with that from renewable sources. Remarkably, the energy generation from conventional sources reached 811.143 BU and from renewable sources 9.860 BU in 2010 compared to 1.206.306 BU and 88.945 BU in 2017, respectively [ 48 ]. It is observed that the price of electricity production using renewable technologies is higher than that for conventional generation technologies, but is likely to fall with increasing experience in the techniques involved [ 49 ].

The annual growth in power generation as per the 30th of November 2018

Gross electricity generation from renewable energy—according to regions

Table 14 shows the gross electricity generation from renewable energy-region wise. It is noted that the highest renewable energy generation derives from the southern region, followed by the western part. As of November 2018, 50.33% of energy generation was obtained from the southern area and 29.37%, 18.05%, 2%, and 0.24% from Western, Northern, North-Eastern Areas, and the Island, respectively.

Gross electricity generation from renewable energy—according to states

Table 15 shows the gross electricity generation from renewable energy—region-wise. It is observed that the highest renewable energy generation was achieved from Karnataka (16.57%), Tamilnadu (15.82%), Andhra Pradesh (11.92%), and Gujarat (10.87%) as per November 2018. While adding four years from 2015–2016 to 2018–2019 Tamilnadu [ 50 ] remains in the first position followed by Karnataka, Maharashtra, Gujarat and Andhra Pradesh.

Gross electricity generation from renewable energy—according to sources

Table 16 shows the gross electricity generation from renewable energy—source-wise. It can be concluded from the table that the wind-based energy generation as per 2017–2018 is most prominent with 51.71%, followed by solar energy (25.40%), Bagasse (11.63%), small hydropower (7.55%), biomass (3.34%), and WTE (0.35%). There has been a constant increase in the generation of all renewable sources from 2014–2015 to date. Wind energy, as always, was the highest contributor to the total renewable power production. The percentage of solar energy produced in the overall renewable power production comes next to wind and is typically reduced during the monsoon months. The definite improvement in wind energy production can be associated with a “good” monsoon. Cyclonic action during these months also facilitates high-speed winds. Monsoon winds play a significant part in the uptick in wind power production, especially in the southern states of the country.

Estimation of gross electricity generation from renewable energy

Table 17 shows an estimation of gross electricity generation from renewable energy based on the 2015 report of the National Institution for Transforming India (NITI Aayog) [ 51 ]. It is predicted that the share of renewable power will be 10.2% by 2022, but renewable power technologies contributed a record of 13.4% to the cumulative power production in India as of the 31st of August 2018. The power ministry report shows that India generated 122.10 TWh and out of the total electricity produced, renewables generated 16.30 TWh as on the 31st of August 2018. According to the India Brand Equity Foundation report, it is anticipated that by the year 2040, around 49% of total electricity will be produced using renewable energy.

Current achievements in renewable energy 2017–2018

India cares for the planet and has taken a groundbreaking journey in renewable energy through the last 4 years [ 52 , 53 ]. A dedicated ministry along with financial and technical institutions have helped India in the promotion of renewable energy and diversification of its energy mix. The country is engaged in expanding the use of clean energy sources and has already undertaken several large-scale sustainable energy projects to ensure a massive growth of green energy.

1. India doubled its renewable power capacity in the last 4 years. The cumulative renewable power capacity in 2013–2014 reached 35,500 MW and rose to 70,000 MW in 2017–2018.

2. India stands in the fourth and sixth position regarding the cumulative installed capacity in the wind and solar sector, respectively. Furthermore, its cumulative installed renewable capacity stands in fifth position globally as of the 31st of December 2018.

3. As said above, the cumulative renewable energy capacity target for 2022 is given as 175 GW. For 2017–2018, the cumulative installed capacity amounted to 70 GW, the capacity under implementation is 15 GW and the tendered capacity was 25 GW. The target, the installed capacity, the capacity under implementation, and the tendered capacity are shown in Fig. 4 .

4. There is tremendous growth in solar power. The cumulative installed solar capacity increased by more than eight times in the last 4 years from 2.630 GW (2013–2014) to 22 GW (2017–2018). As of the 31st of December 2018, the installed capacity amounted to 25.2122 GW.

5. The renewable electricity generated in 2017–2018 was 101839 BUs.

6. The country published competitive bidding guidelines for the production of renewable power. It also discovered the lowest tariff and transparent bidding method and resulted in a notable decrease in per unit cost of renewable energy.

7. In 21 states, there are 41 solar parks with a cumulative capacity of more than 26,144 MW that have already been approved by the MNRE. The Kurnool solar park was set up with 1000 MW; and with 2000 MW the largest solar park of Pavagada (Karnataka) is currently under installation.

8. The target for solar power (ground mounted) for 2018–2019 is given as 10 GW, and solar power (Rooftop) as 1 GW.

9. MNRE doubled the target for solar parks (projects of 500 MW or more) from 20 to 40 GW.

10. The cumulative installed capacity of wind power increased by 1.6 times in the last 4 years. In 2013–2014, it amounted to 21 GW, from 2017 to 2018 it amounted to 34 GW, and as of 31st of December 2018, it reached 35.138 GW. This shows that achievements were completed in wind power use.

11. An offshore wind policy was announced. Thirty-four companies (most significant global and domestic wind power players) competed in the “expression of interest” (EoI) floated on the plan to set up India’s first mega offshore wind farm with a capacity of 1 GW.

12. 682 MW small hydropower projects were installed during the last 4 years along with 600 watermills (mechanical applications) and 132 projects still under development.

13. MNRE is implementing green energy corridors to expand the transmission system. 9400 km of green energy corridors are completed or under implementation. The cost spent on it was INR 10141 crore (101,410 Million INR = 1425.01 USD). Furthermore, the total capacity of 19,000 MVA substations is now planned to be complete by March 2020.

14. MNRE is setting up solar pumps (off-grid application), where 90% of pumps have been set up as of today and between 2014–2015 and 2017–2018. Solar street lights were more than doubled. Solar home lighting systems have been improved by around 1.5 times. More than 2,575,000 solar lamps have been distributed to students. The details are illustrated in Fig. 5 .

15. From 2014–2015 to 2017–2018, more than 2.5 lakh (0.25 million) biogas plants were set up for cooking in rural homes to enable families by providing them access to clean fuel.

16. New policy initiatives revised the tariff policy mandating purchase and generation obligations (RPO and RGO). Four wind and solar inter-state transmission were waived; charges were planned, the RPO trajectory for 2022 and renewable energy policy was finalized.

17. Expressions of interest (EoI) were invited for installing solar photovoltaic manufacturing capacities associated with the guaranteed off-take of 20 GW. EoI indicated 10 GW floating solar energy plants.

18. Policy for the solar-wind hybrid was announced. Tender for setting up 2 GW solar-wind hybrid systems in existing projects was invited.

19. To facilitate R&D in renewable power technology, a National lab policy on testing, standardization, and certification was announced by the MNRE.

20. The Surya Mitra program was conducted to train college graduates in the installation, commissioning, operations, and management of solar panels. The International Solar Alliance (ISA) headquarters in India (Gurgaon) will be a new commencement for solar energy improvement in India.

21. The renewable sector has become considerably more attractive for foreign and domestic investors, and the country expects to attract up to USD 80 billion in the next 4 years from 2018–2019 to 2021–2022.

22. The solar power capacity expanded by more than eight times from 2.63 GW in 2013–2014 to 22 GW in 2017–2018.

23. A bidding for 115 GW renewable energy projects up to March 2020 was announced.

24. The Bureau of Indian Standards (BIS) acting for system/components of solar PV was established.

25. To recognize and encourage innovative ideas in renewable energy sectors, the Government provides prizes and awards. Creative ideas/concepts should lead to prototype development. The Name of the award is “Abhinav Soch-Nayi Sambhawanaye,” which means Innovative ideas—New possibilities.

Renewable energy target, installed capacity, under implementation and tendered [ 52 ]

Off-grid solar applications [ 52 ]

Solar energy

Under the National Solar Mission, the MNRE has updated the objective of grid-connected solar power projects from 20 GW by the year 2021–2022 to 100 GW by the year 2021–2022. In 2008–2009, it reached just 6 MW. The “Made in India” initiative to promote domestic manufacturing supported this great height in solar installation capacity. Currently, India has the fifth highest solar installed capacity worldwide. By the 31st of December 2018, solar energy had achieved 25,212.26 MW against the target of 2022, and a further 22.8 GW of capacity has been tendered out or is under current implementation. MNRE is preparing to bid out the remaining solar energy capacity every year for the periods 2018–2019 and 2019–2020 so that bidding may contribute with 100 GW capacity additions by March 2020. In this way, 2 years for the completion of projects would remain. Tariffs will be determined through the competitive bidding process (reverse e-auction) to bring down tariffs significantly. The lowest solar tariff was identified to be INR 2.44 per kWh in July 2018. In 2010, solar tariffs amounted to INR 18 per kWh. Over 100,000 lakh (10,000 million) acres of land had been classified for several planned solar parks, out of which over 75,000 acres had been obtained. As of November 2018, 47 solar parks of a total capacity of 26,694 MW were established. The aggregate capacity of 4195 MW of solar projects has been commissioned inside various solar parks (floating solar power). Table 18 shows the capacity addition compared to the target. It indicates that capacity addition increased exponentially.

Wind energy

As of the 31st of December 2018, the total installed capacity of India amounted to 35,138.15 MW compared to a target of 60 GW by 2022. India is currently in fourth position in the world for installed capacity of wind power. Moreover, around 9.4 GW capacity has been tendered out or is under current implementation. The MNRE is preparing to bid out for A 10 GW wind energy capacity every year for 2018–2019 and 2019–2020, so that bidding will allow for 60 GW capacity additions by March 2020, giving the remaining two years for the accomplishment of the projects. The gross wind energy potential of the country now reaches 302 GW at a 100 m above-ground level. The tariff administration has been changed from feed-in-tariff (FiT) to the bidding method for capacity addition. On the 8th of December 2017, the ministry published guidelines for a tariff-based competitive bidding rule for the acquisition of energy from grid-connected wind energy projects. The developed transparent process of bidding lowered the tariff for wind power to its lowest level ever. The development of the wind industry has risen in a robust ecosystem ensuring project execution abilities and a manufacturing base. State-of-the-art technologies are now available for the production of wind turbines. All the major global players in wind power have their presence in India. More than 12 different companies manufacture more than 24 various models of wind turbines in India. India exports wind turbines and components to the USA, Europe, Australia, Brazil, and other Asian countries. Around 70–80% of the domestic production has been accomplished with strong domestic manufacturing companies. Table 19 lists the capacity addition compared to the target for the capacity addition. Furthermore, electricity generation from the wind-based capacity has improved, even though there was a slowdown of new capacity in the first half of 2018–2019 and 2017–2018.

The national energy storage mission—2018

The country is working toward a National Energy Storage Mission. A draft of the National Energy Storage Mission was proposed in February 2018 and initiated to develop a comprehensive policy and regulatory framework. During the last 4 years, projects included in R&D worth INR 115.8 million (USD 1.66 million) in the domain of energy storage have been launched, and a corpus of INR 48.2 million (USD 0.7 million) has been issued. India’s energy storage mission will provide an opportunity for globally competitive battery manufacturing. By increasing the battery manufacturing expertise and scaling up its national production capacity, the country can make a substantial economic contribution in this crucial sector. The mission aims to identify the cumulative battery requirements, total market size, imports, and domestic manufacturing. Table 20 presents the economic opportunity from battery manufacturing given by the National Institution for Transforming India, also called NITI Aayog, which provides relevant technical advice to central and state governments while designing strategic and long-term policies and programs for the Indian government.

Small hydropower—3-year action agenda—2017

Hydro projects are classified as large hydro, small hydro (2 to 25 MW), micro-hydro (up to 100 kW), and mini-hydropower (100 kW to 2 MW) projects. Whereas the estimated potential of SHP is 20 GW, the 2022 target for India in SHP is 5 GW. As of the 31st of December 2018, the country has achieved 4.5 GW and this production is constantly increasing. The objective, which was planned to be accomplished through infrastructure project grants and tariff support, was included in the NITI Aayog’s 3-year action agenda (2017–2018 to 2019–2020), which was published on the 1st of August 2017. MNRE is providing central financial assistance (CFA) to set up small/micro hydro projects both in the public and private sector. For the identification of new potential locations, surveys and comprehensive project reports are elaborated, and financial support for the renovation and modernization of old projects is provided. The Ministry has established a dedicated completely automatic supervisory control and data acquisition (SCADA)—based on a hydraulic turbine R&D laboratory at the Alternate Hydro Energy Center (AHEC) at IIT Roorkee. The establishment cost for the lab was INR 40 crore (400 million INR, 95.62 Million USD), and the laboratory will serve as a design and validation facility. It investigates hydro turbines and other hydro-mechanical devices adhering to national and international standards [ 54 , 55 ]. Table 21 shows the target and achievements from 2007–2008 to 2018–2019.

National policy regarding biofuels—2018

Modernization has generated an opportunity for a stable change in the use of bioenergy in India. MNRE amended the current policy for biomass in May 2018. The policy presents CFA for projects using biomass such as agriculture-based industrial residues, wood produced through energy plantations, bagasse, crop residues, wood waste generated from industrial operations, and weeds. Under the policy, CFA will be provided to the projects at the rate of INR 2.5 million (USD 35,477.7) per MW for bagasse cogeneration and INR 5 million (USD 70,955.5) per MW for non-bagasse cogeneration. The MNRE also announced a memorandum in November 2018 considering the continuation of the concessional customs duty certificate (CCDC) to set up projects for the production of energy using non-conventional materials such as bio-waste, agricultural, forestry, poultry litter, agro-industrial, industrial, municipal, and urban wastes. The government recently established the National policy on biofuels in August 2018. The MNRE invited an expression of interest (EOI) to estimate the potential of biomass energy and bagasse cogeneration in the country. A program to encourage the promotion of biomass-based cogeneration in sugar mills and other industries was also launched in May 2018. Table 22 shows how the biomass power target and achievements are expected to reach 10 GW of the target of 2022 before the end of 2019.

The new national biogas and organic manure program (NNBOMP)—2018

The National biogas and manure management programme (NBMMP) was launched in 2012–2013. The primary objective was to provide clean gaseous fuel for cooking, where the remaining slurry was organic bio-manure which is rich in nitrogen, phosphorus, and potassium. Further, 47.5 lakh (4.75 million) cumulative biogas plants were completed in 2014, and increased to 49.8 lakh (4.98 million). During 2017–2018, the target was to establish 1.10 lakh biogas plants (1.10 million), but resulted in 0.15 lakh (0.015 million). In this way, the cost of refilling the gas cylinders with liquefied petroleum gas (LPG) was greatly reduced. Likewise, tons of wood/trees were protected from being axed, as wood is traditionally used as a fuel in rural and semi-urban households. Biogas is a viable alternative to traditional cooking fuels. The scheme generated employment for almost 300 skilled laborers for setting up the biogas plants. By 30th of May 2018, the Ministry had issued guidelines for the implementation of the NNBOMP during the period 2017–2018 to 2019–2020 [ 56 ].

The off-grid and decentralized solar photovoltaic application program—2018

The program deals with the energy demand through the deployment of solar lanterns, solar streetlights, solar home lights, and solar pumps. The plan intended to reach 118 MWp of off-grid PV capacity by 2020. The sanctioning target proposed outlay was 50 MWp by 2017–2018 and 68 MWp by 2019–2020. The total estimated cost amounted to INR 1895 crore (18950 Million INR, 265.547 million USD), and the ministry wanted to support 637 crores (6370 million INR, 89.263 million USD) by its central finance assistance. Solar power plants with a 25 KWp size were promoted in those areas where grid power does not reach households or is not reliable. Public service institutions, schools, panchayats, hostels, as well as police stations will benefit from this scheme. Solar study lamps were also included as a component in the program. Thirty percent of financial assistance was provided to solar power plants. Every student should bear 15% of the lamp cost, and the ministry wanted to support the remaining 85%. As of October 2018, lantern and lamps of more than 40 Lakhs (4 million), home lights of 16.72 lakhs (1.672 million) number, street lights of 6.40 lakhs (0.64 million), solar pumps of 1.96 lakhs (0.196 million), and 187.99 MWp stand-alone devices had been installed [ 57 , 58 ].

Major government initiatives for renewable energy

Technological initiatives.

The Technology Development and Innovation Policy (TDIP) released on the 6th of October 2017 was endeavored to promote research, development, and demonstration (RD&D) in the renewable energy sector [ 59 ]. RD&D intended to evaluate resources, progress in technology, commercialization, and the presentation of renewable energy technologies across the country. It aimed to produce renewable power devices and systems domestically. The evaluation of standards and resources, processes, materials, components, products, services, and sub-systems was carried out through RD&D. A development of the market, efficiency improvements, cost reductions, and a promotion of commercialization (scalability and bankability) were achieved through RD&D. Likewise, the percentage of renewable energy in the total electricity mix made it self-sustainable, industrially competitive, and profitable through RD&D. RD&D also supported technology development and demonstration in wind, solar, wind-solar hybrid, biofuel, biogas, hydrogen fuel cells, and geothermal energies. RD&D supported the R&D units of educational institutions, industries, and non-government organizations (NGOs). Sharing expertise, information, as well as institutional mechanisms for collaboration was realized by use of the technology development program (TDP). The various people involved in this program were policymakers, industrial innovators, associated stakeholders and departments, researchers, and scientists. Renowned R&D centers in India are the National Institute of Solar Energy (NISE), Gurgaon, the National Institute of Bio-Energy (NIBE), Kapurthala, and the National Institute of Wind Energy (NIWE), Chennai. The TDP strategy encouraged the exploration of innovative approaches and possibilities to obtain long-term targets. Likewise, it efficiently supported the transformation of knowledge into technology through a well-established monitoring system for the development of renewable technology that meets the electricity needs of India. The research center of excellence approved the TDI projects, which were funded to strengthen R&D. Funds were provided for conducting training and workshops. The MNRE is now preparing a database of R&D accomplishments in the renewable energy sector.

The Impacting Research Innovation and Technology (IMPRINT) program seeks to develop engineering and technology (prototype/process development) on a national scale. IMPRINT is steered by the Indian Institute of Technologies (IITs) and Indian Institute of science (IISCs). The expansion covers all areas of engineering and technology including renewable technology. The ministry of human resource development (MHRD) finances up to 50% of the total cost of the project. The remaining costs of the project are financed by the ministry (MNRE) via the RD&D program for renewable projects. Currently (2018–2019), five projects are under implementation in the area of solar thermal systems, storage for SPV, biofuel, and hydrogen and fuel cells which are funded by the MNRE (36.9 million INR, 0.518426 Million USD) and IMPRINT. Development of domestic technology and quality control are promoted through lab policies that were published on the 7th of December 2017. Lab policies were implemented to test, standardize, and certify renewable energy products and projects. They supported the improvement of the reliability and quality of the projects. Furthermore, Indian test labs are strengthened in line with international standards and practices through well-established lab policies. From 2015, the MNRE has provided “The New and Renewable Energy Young Scientist’s Award” to researchers/scientists who demonstrate exceptional accomplishments in renewable R&D.

Financial initiatives

One hundred percent financial assistance is granted by the MNRE to the government and NGOs and 50% financial support to the industry. The policy framework was developed to guide the identification of the project, the formulation, monitoring appraisal, approval, and financing. Between 2012 and 2017, a 4467.8 million INR, 62.52 Million USD) support was granted by the MNRE. The MNRE wanted to double the budget for technology development efforts in renewable energy for the current three-year plan period. Table 23 shows that the government is spending more and more for the development of the renewable energy sector. Financial support was provided to R&D projects. Exceptional consideration was given to projects that worked under extreme and hazardous conditions. Furthermore, financial support was applied to organizing awareness programs, demonstrations, training, workshops, surveys, assessment studies, etc. Innovative approaches will be rewarded with cash prizes. The winners will be presented with a support mechanism for transforming their ideas and prototypes into marketable commodities such as start-ups for entrepreneur development. Innovative projects will be financed via start-up support mechanisms, which will include an investment contract with investors. The MNRE provides funds to proposals for investigating policies and performance analyses related to renewable energy.

Technology validation and demonstration projects and other innovative projects with regard to renewables received a financial assistance of 50% of the project cost. The CFA applied to partnerships with industry and private institutions including engineering colleges. Private academic institutions, accredited by a government accreditation body, were also eligible to receive a 50% support. The concerned industries and institutions should meet the remaining 50% expenditure. The MNRE allocated an INR 3762.50 crore (INR 37625 million, 528.634 million USD) for the grid interactive renewable sources and an INR 1036.50 crore (INR 10365 million, 145.629 million USD) for off-grid/distributed and decentralized renewable power for the year 2018–2019 [ 60 ]. The MNRE asked the Reserve Bank of India (RBI), attempting to build renewable power projects under “priority sector lending” (priority lending should be done for renewable energy projects and without any limit) and to eliminate the obstacles in the financing of renewable energy projects. In July 2018, the Ministry of Finance announced that it would impose a 25% safeguard duty on solar panels and modules imported from China and Malaysia for 1 year. The quantum of tax might be reduced to 20% for the next 6 months, and 15% for the following 6 months.

Policy and regulatory framework initiatives

The regulatory interventions for the development of renewable energy sources are (a) tariff determination, (b) defining RPO, (c) promoting grid connectivity, and (d) promoting the expansion of the market.

Tariff policy amendments—2018

On the 30th of May 2018, the MoP released draft amendments to the tariff policy. The objective of these policies was to promote electricity generation from renewables. MoP in consultation with MNRE announced the long-term trajectory for RPO, which is represented in Table 24 . The State Electricity Regulatory Commission (SERC) achieved a favorable and neutral/off-putting effect in the growth of the renewable power sector through their RPO regulations in consultation with the MNRE. On the 25th of May 2018, the MNRE created an RPO compliance cell to reach India’s solar and wind power goals. Due to the absence of implementation of RPO regulations, several states in India did not meet their specified RPO objectives. The cell will operate along with the Central Electricity Regulatory Commission (CERC) and SERCs to obtain monthly statements on RPO compliance. It will also take up non-compliance associated concerns with the relevant officials.

Repowering policy—2016

On the 09th of August 2016, India announced a “repowering policy” for wind energy projects. An about 27 GW turnaround was possible according to the policy. This policy supports the replacing of aging wind turbines with more modern and powerful units (fewer, larger, taller) to raise the level of electricity generation. This policy seeks to create a simplified framework and to promote an optimized use of wind power resources. It is mandatory because the up to the year 2000 installed wind turbines were below 500 kW in sites where high wind potential might be achieved. It will be possible to obtain 3000 MW from the same location once replacements are in place. The policy was initially applied for the one MW installed capacity of wind turbines, and the MNRE will extend the repowering policy to other projects in the future based on experience. Repowering projects were implemented by the respective state nodal agencies/organizations that were involved in wind energy promotion in their states. The policy provided an exception from the Power Purchase Agreement (PPA) for wind farms/turbines undergoing repowering because they could not fulfill the requirements according to the PPA during repowering. The repowering projects may avail accelerated depreciation (AD) benefit or generation-based incentive (GBI) due to the conditions appropriate to new wind energy projects [ 61 ].

The wind-solar hybrid policy—2018

On the 14th of May 2018, the MNRE announced a national wind-solar hybrid policy. This policy supported new projects (large grid-connected wind-solar photovoltaic hybrid systems) and the hybridization of the already available projects. These projects tried to achieve an optimal and efficient use of transmission infrastructure and land. Better grid stability was achieved and the variability in renewable power generation was reduced. The best part of the policy intervention was that which supported the hybridization of existing plants. The tariff-based transparent bidding process was included in the policy. Regulatory authorities should formulate the necessary standards and regulations for hybrid systems. The policy also highlighted a battery storage in hybrid projects for output optimization and variability reduction [ 62 ].

The national offshore wind energy policy—2015

The National Offshore Wind Policy was released in October 2015. On the 19th of June 2018, the MNRE announced a medium-term target of 5 GW by 2022 and a long-term target of 30 GW by 2030. The MNRE called expressions of Interest (EoI) for the first 1 GW of offshore wind (the last date was 08.06.2018). The EoI site is located in Pipavav port at the Gulf of Khambhat at a distance of 23 km facilitating offshore wind (FOWIND) where the consortium deployed light detection and ranging (LiDAR) in November 2017). Pipavav port is situated off the coast of Gujarat. The MNRE had planned to install more such equipment in the states of Tamil Nadu and Gujarat. On the 14 th of December 2018, the MNRE, through the National Institute of Wind Energy (NIWE), called tender for offshore environmental impact assessment studies at intended LIDAR points at the Gulf of Mannar, off the coast of Tamil Nadu for offshore wind measurement. The timeline for initiatives was to firstly add 500 MW by 2022, 2 to 2.5 GW by 2027, and eventually reaching 5 GW between 2028 and 2032. Even though the installation of large wind power turbines in open seas is a challenging task, the government has endeavored to promote this offshore sector. Offshore wind energy would add its contribution to the already existing renewable energy mix for India [ 63 ] .

The feed-in tariff policy—2018

On the 28th of January 2016, the revised tariff policy was notified following the Electricity Act. On the 30th May 2018, the amendment in tariff policy was released. The intentions of this tariff policy are (a) an inexpensive and competitive electricity rate for the consumers; (b) to attract investment and financial viability; (c) to ensure that the perceptions of regulatory risks decrease through predictability, consistency, and transparency of policy measures; (d) development in quality of supply, increased operational efficiency, and improved competition; (e) increase the production of electricity from wind, solar, biomass, and small hydro; (f) peaking reserves that are acceptable in quantity or consistently good in quality or performance of grid operation where variable renewable energy source integration is provided through the promotion of hydroelectric power generation, including pumped storage projects (PSP); (g) to achieve better consumer services through efficient and reliable electricity infrastructure; (h) to supply sufficient and uninterrupted electricity to every level of consumers; and (i) to create adequate capacity, reserves in the production, transmission, and distribution that is sufficient for the reliability of supply of power to customers [ 64 ].

Training and educational initiatives

The MHRD has developed strong renewable energy education and training systems. The National Council for Vocational Training (NCVT) develops course modules, and a Modular Employable Skilling program (MES) in its regular 2-year syllabus to include SPV lighting systems, solar thermal systems, SHP, and provides the certificate for seven trades after the completion of a 2-year course. The seven trades are plumber, fitter, carpenter, welder, machinist, and electrician. The Ministry of Skill Development and Entrepreneurship (MSDE) worked out a national skill development policy in 2015. They provide regular training programs to create various job roles in renewable energy along with the MNRE support through a skill council for green jobs (SCGJ), the National Occupational Standards (NOS), and the Qualification Pack (QP). The SCGJ is promoted by the Confederation of Indian Industry (CII) and the MNRE. The industry partner for the SCGJ is ReNew Power [ 65 , 66 ].

The global status of India in renewable energy

Table 25 shows the RECAI (Renewable Energy Country Attractiveness Index) report of 40 countries. This report is based on the attractiveness of renewable energy investment and deployment opportunities. RECAI is based on macro vitals such as economic stability, investment climate, energy imperatives such as security and supply, clean energy gap, and affordability. It also includes policy enablement such as political stability and support for renewables. Its emphasis lies on project delivery parameters such as energy market access, infrastructure, and distributed generation, finance, cost and availability, and transaction liquidity. Technology potentials such as natural resources, power take-off attractiveness, potential support, technology maturity, and forecast growth are taken into consideration for ranking. India has moved to the fourth position of the RECAI-2018. Indian solar installations (new large-scale and rooftop solar capacities) in the calendar year 2017 increased exponentially with the addition of 9629 MW, whereas in 2016 it was 4313 MW. The warning of solar import tariffs and conflicts between developers and distribution firms are growing investor concerns [ 67 ]. Figure 6 shows the details of the installed capacity of global renewable energy in 2016 and 2017. Globally, 2017 GW renewable energy was installed in 2016, and in 2017, it increased to 2195 GW. Table 26 shows the total capacity addition of top countries until 2017. The country ranked fifth in renewable power capacity (including hydro energy), renewable power capacity (not including hydro energy) in fourth position, concentrating solar thermal power (CSP) and wind power were also in fourth position [ 68 ].

Globally installed capacity of renewable energy in 2017—Global 2018 status report with regard to renewables [ 68 ]

The investment opportunities in renewable energy in India

The investments into renewable energy in India increased by 22% in the first half of 2018 compared to 2017, while the investments in China dropped by 15% during the same period, according to a statement by the Bloomberg New Energy Finance (BNEF), which is shown in Table 27 [ 69 , 70 ]. At this rate, India is expected to overtake China and become the most significant growth market for renewable energy by the end of 2020. The country is eyeing pole position for transformation in renewable energy by reaching 175 GW by 2020. To achieve this target, it is quickly ramping up investments in this sector. The country added more renewable capacity than conventional capacity in 2018 when compared to 2017. India hosted the ISA first official summit on the 11.03.2018 for 121 countries. This will provide a standard platform to work toward the ambitious targets for renewable energy. The summit will emphasize India’s dedication to meet global engagements in a time-bound method. The country is also constructing many sizeable solar power parks comparable to, but larger than, those in China. Half of the earth’s ten biggest solar parks under development are in India.

In 2014, the world largest solar park was the Topaz solar farm in California with a 550 MW facility. In 2015, another operator in California, Solar Star, edged its capacity up to 579 MW. By 2016, India’s Kamuthi Solar Power Project in Tamil Nadu was on top with 648 MW of capacity (set up by the Adani Green Energy, part of the Adani Group, in Tamil Nadu). As of February 2017, the Longyangxia Dam Solar Park in China was the new leader, with 850 MW of capacity [ 71 ]. Currently, there are 600 MW operating units and 1400 MW units under construction. The Shakti Sthala solar park was inaugurated on 01.03.2018 in Pavagada (Karnataka, India) which is expected to become the globe’s most significant solar park when it accomplishes its full potential of 2 GW. Another large solar park with 1.5 GW is scheduled to be built in the Kadappa region [ 72 ]. The progress in solar power is remarkable and demonstrates real clean energy development on the ground.

The Kurnool ultra-mega solar park generated 800 million units (MU) of energy in October 2018 and saved over 700,000 tons of CO 2 . Rainwater was harvested using a reservoir that helps in cleaning solar panels and supplying water. The country is making remarkable progress in solar energy. The Kamuthi solar farm is cleaned each day by a robotic system. As the Indian economy expands, electricity consumption is forecasted to reach 15,280 TWh in 2040. With the government’s intent, green energy objectives, i.e., the renewable sector, grow considerably in an attractive manner with both foreign and domestic investors. It is anticipated to attract investments of up to USD 80 billion in the subsequent 4 years. The government of India has raised its 175 GW target to 225 GW of renewable energy capacity by 2022. The competitive benefit is that the country has sun exposure possible throughout the year and has an enormous hydropower potential. India was also listed fourth in the EY renewable energy country attractive index 2018. Sixty solar cities will be built in India as a section of MNRE’s “Solar cities” program.

In a regular auction, reduction in tariffs cost of the projects are the competitive benefits in the country. India accounts for about 4% of the total global electricity generation capacity and has the fourth highest installed capacity of wind energy and the third highest installed capacity of CSP. The solar installation in India erected during 2015–2016, 2016–2017, 2017–2018, and 2018–2019 was 3.01 GW, 5.52 GW, 9.36 GW, and 6.53 GW, respectively. The country aims to add 8.5 GW during 2019–2020. Due to its advantageous location in the solar belt (400 South to 400 North), the country is one of the largest beneficiaries of solar energy with relatively ample availability. An increase in the installed capacity of solar power is anticipated to exceed the installed capacity of wind energy, approaching 100 GW by 2022 from its current levels of 25.21226 GW as of December 2018. Fast falling prices have made Solar PV the biggest market for new investments. Under the Union Budget 2018–2019, a zero import tax on parts used in manufacturing solar panels was launched to provide an advantage to domestic solar panel companies [ 73 ].

Foreign direct investment (FDI) inflows in the renewable energy sector of India between April 2000 and June 2018 amounted to USD 6.84 billion according to the report of the department of industrial policy and promotion (DIPP). The DIPP was renamed (gazette notification 27.01.2019) the Department for the Promotion of Industry and Internal Trade (DPIIT). It is responsible for the development of domestic trade, retail trade, trader’s welfare including their employees as well as concerns associated with activities in facilitating and supporting business and startups. Since 2014, more than 42 billion USD have been invested in India’s renewable power sector. India reached US$ 7.4 billion in investments in the first half of 2018. Between April 2015 and June 2018, the country received USD 3.2 billion FDI in the renewable sector. The year-wise inflows expanded from USD 776 million in 2015–2016 to USD 783 million in 2016–2017 and USD 1204 million in 2017–2018. Between January to March of 2018, the INR 452 crore (4520 Million INR, 63.3389 million USD) of the FDI had already come in. The country is contributing with financial and promotional incentives that include a capital subsidy, accelerated depreciation (AD), waiver of inter-state transmission charges and losses, viability gap funding (VGF), and FDI up to 100% under the automated track.

The DIPP/DPIIT compiles and manages the data of the FDI equity inflow received in India [ 74 ]. The FDI equity inflow between April 2015 and June 2018 in the renewable sector is illustrated in Fig. 7 . It shows that the 2018–2019 3 months’ FDI equity inflow is half of that of the entire one of 2017–2018. It is evident from the figure that India has well-established FDI equity inflows. The significant FDI investments in the renewable energy sectors are shown in Table 28 . The collaboration between the Asian development bank and Renew Power Ventures private limited with 44.69 million USD ranked first followed by AIRRO Singapore with Diligent power with FDI equity inflow of 44.69 USD million.

The FDI equity inflow received between April 2015 and June 2018 in the renewable energy sector [ 73 ]

Strategies to promote investments

Strategies to promote investments (including FDI) by investors in the renewable sector:

Decrease constraints on FDI; provide open, transparent, and dependable conditions for foreign and domestic firms; and include ease of doing business, access to imports, comparatively flexible labor markets, and safeguard of intellectual property rights.

Establish an investment promotion agency (IPA) that targets suitable foreign investors and connects them as a catalyst with the domestic economy. Assist the IPA to present top-notch infrastructure and immediate access to skilled workers, technicians, engineers, and managers that might be needed to attract such investors. Furthermore, it should involve an after-investment care, recognizing the demonstration effects from satisfied investors, the potential for reinvestments, and the potential for cluster-development due to follow-up investments.

It is essential to consider the targeted sector (wind, solar, SPH or biomass, respectively) for which investments are required.

Establish the infrastructure needed for a quality investor, including adequate close-by transport facilities (airport, ports), a sufficient and steady supply of energy, a provision of a sufficiently skilled workforce, the facilities for the vocational training of specialized operators, ideally designed in collaboration with the investor.

Policy and other support mechanisms such as Power Purchase Agreements (PPA) play an influential role in underpinning returns and restricting uncertainties for project developers, indirectly supporting the availability of investment. Investors in renewable energy projects have historically relied on government policies to give them confidence about the costs necessary for electricity produced—and therefore for project revenues. Reassurance of future power costs for project developers is secured by signing a PPA with either a utility or an essential corporate buyer of electricity.

FiT have been the most conventional approach around the globe over the last decade to stimulate investments in renewable power projects. Set by the government concerned, they lay down an electricity tariff that developers of qualifying new projects might anticipate to receive for the resulting electricity over a long interval (15–20 years). These present investors in the tax equity of renewable power projects with a credit that they can manage to offset the tax burden outside in their businesses.

Table 29 presents the 2018 renewable energy investment report, source-wise, by the significant players in renewables according to the report of the Bloomberg New Energy Finance Report 2018. As per this report, global investment in renewable energy was USD of 279.8 billion in 2017. The top ten in the total global investments are China (126.1 $BN), the USA (40.5 $BN), Japan (13.4 $BN), India (10.9 $BN), Germany (10.4 $BN), Australia (8.5 $BN), UK (7.6 $BN), Brazil (6.0 $BN), Mexico (6.0 $BN), and Sweden (3.7 $BN) [ 75 ]. This achievement was possible since those countries have well-established strategies for promoting investments [ 76 , 77 ].

The appropriate objectives for renewable power expansion and investments are closely related to the Nationally Determined Contributions (NDCs) objectives, the implementation of the NDC, on the road to achieving Paris promises, policy competence, policy reliability, market absorption capacity, and nationwide investment circumstances that are the real purposes for renewable power expansion, which is a significant factor for the investment strategies, as is shown in Table 30 .

The demand for investments for building a Paris-compatible and climate-resilient energy support remains high, particularly in emerging nations. Future investments in energy grids and energy flexibility are of particular significance. The strategies and the comparison chart between China, India, and the USA are presented in Table 31 .

Table 32 shows France in the first place due to overall favorable conditions for renewables, heading the G20 in investment attractiveness of renewables. Germany drops back one spot due to a decline in the quality of the global policy environment for renewables and some insufficiencies in the policy design, as does the UK. Overall, with four European countries on top of the list, Europe, however, directs the way in providing attractive conditions for investing in renewables. Despite high scores for various nations, no single government is yet close to growing a role model. All countries still have significant room for increasing investment demands to deploy renewables at the scale required to reach the Paris objectives. The table shown is based on the Paris compatible long-term vision, the policy environment for renewable energy, the conditions for system integration, the market absorption capacity, and general investment conditions. India moved from the 11th position to the 9th position in overall investments between 2017 and 2018.

A Paris compatible long-term vision includes a de-carbonization plan for the power system, the renewable power ambition, the coal and oil decrease, and the reliability of renewables policies. Direct support policies include medium-term certainty of policy signals, streamlined administrative procedures, ensuring project realization, facilitating the use of produced electricity. Conditions for system integration include system integration-grid codes, system integration-storage promotion, and demand-side management policies. A market absorption capacity includes a prior experience with renewable technologies, a current activity with renewable installations, and a presence of major renewable energy companies. General investment conditions include non-financial determinants, depth of the financial sector as well, as an inflation forecast.

Employment opportunities for citizens in renewable energy in India

Global employment scenario.

According to the 2018 Annual review of the IRENA [ 78 ], global renewable energy employment touched 10.3 million jobs in 2017, an improvement of 5.3% compared with the quantity published in 2016. Many socio-economic advantages derive from renewable power, but employment continues to be exceptionally centralized in a handful of countries, with China, Brazil, the USA, India, Germany, and Japan in the lead. In solar PV employment (3.4 million jobs), China is the leader (65% of PV Jobs) which is followed by Japan, USA, India, Bangladesh, Malaysia, Germany, Philippines, and Turkey. In biofuels employment (1.9 million jobs), Brazil is the leader (41% of PV Jobs) followed by the USA, Colombia, Indonesia, Thailand, Malaysia, China, and India. In wind employment (1.1 million jobs), China is the leader (44% of PV Jobs) followed by Germany, USA, India, UK, Brazil, Denmark, Netherlands, France, and Spain.

Table 33 shows global renewable energy employment in the corresponding technology branches. As in past years, China maintained the most notable number of people employed (3880 million jobs) estimating for 43% of the globe’s total which is shown in Fig. 8 . In India, new solar installations touched a record of 9.6 GW in 2017, efficiently increasing the total installed capacity. The employment in solar PV improved by 36% and reached 164,400 jobs, of which 92,400 represented on-grid use. IRENA determines that the building and installation covered 46% of these jobs, with operations and maintenance (O&M) representing 35% and 19%, individually. India does not produce solar PV because it could be imported from China, which is inexpensive. The market share of domestic companies (Indian supplier to renewable projects) declined from 13% in 2014–2015 to 7% in 2017–2018. If India starts the manufacturing base, more citizens will get jobs in the manufacturing field. India had the world’s fifth most significant additions of 4.1 GW to wind capacity in 2017 and the fourth largest cumulative capacity in 2018. IRENA predicts that jobs in the wind sector stood at 60,500.

Renewable energy employment in selected countries [ 79 ]

The jobs in renewables are categorized into technological development, installation/de-installation, operation, and maintenance. Tables 34 , 35 , 36 , and 37 show the wind industry, solar energy, biomass, and small hydro-related jobs in project development, component manufacturing, construction, operations, and education, training, and research. As technology quickly evolves, workers in all areas need to update their skills through continuing training/education or job training, and in several cases could benefit from professional certification. The advantages of moving to renewable energy are evident, and for this reason, the governments are responding positively toward the transformation to clean energy. Renewable energy can be described as the country’s next employment boom. Renewable energy job opportunities can transform rural economy [ 79 , 80 ]. The renewable energy sector might help to reduce poverty by creating better employment. For example, wind power is looking for specialists in manufacturing, project development, and construction and turbine installation as well as financial services, transportation and logistics, and maintenance and operations.

The government is building more renewable energy power plants that will require a workforce. The increasing investments in the renewable energy sector have the potential to provide more jobs than any other fossil fuel industry. Local businesses and renewable sectors will benefit from this change, as income will increase significantly. Many jobs in this sector will contribute to fixed salaries, healthcare benefits, and skill-building opportunities for unskilled and semi-skilled workers. A range of skilled and unskilled jobs are included in all renewable energy technologies, even though most of the positions in the renewable energy industry demand a skilled workforce. The renewable sector employs semi-skilled and unskilled labor in the construction, operations, and maintenance after proper training. Unskilled labor is employed as truck drivers, guards, cleaning, and maintenance. Semi-skilled labor is used to take regular readings from displays. A lack of consistent data on the potential employment impact of renewables expansion makes it particularly hard to assess the quantity of skilled, semi-skilled, and unskilled personnel that might be needed.

Key findings in renewable energy employment

The findings comprise (a) that the majority of employment in the renewable sector is contract based, and that employees do not benefit from permanent jobs or security. (b) Continuous work in the industry has the potential to decrease poverty. (c) Most poor citizens encounter obstacles to entry-level training and the employment market due to lack of awareness about the jobs and the requirements. (d) Few renewable programs incorporate developing ownership opportunities for the citizens and the incorporation of women in the sector. (e) The inadequacy of data makes it challenging to build relationships between employment in renewable energy and poverty mitigation.

Recommendations for renewable energy employment

When building the capacity, focus on poor people and individuals to empower them with training in operation and maintenance.

Develop and offer training programs for citizens with minimal education and training, who do not fit current programs, which restrict them from working in renewable areas.

Include women in the renewable workforce by providing localized training.

Establish connections between training institutes and renewable power companies to guarantee that (a) trained workers are placed in appropriate positions during and after the completion of the training program and (b) training programs match the requirements of the renewable sector.

Poverty impact assessments might be embedded in program design to know how programs motivate poverty reduction, whether and how they influence the community.

Allow people to have a sense of ownership in renewable projects because this could contribute to the growth of the sector.

The details of the job being offered (part time, full time, contract-based), the levels of required skills for the job (skilled, semi-skilled and unskilled), the socio-economic status of the employee data need to be collected for further analysis.

Conduct investigations, assisted by field surveys, to learn about the influence of renewable energy jobs on poverty mitigation and differences in the standard of living.

Challenges faced by renewable energy in India

The MNRE has been taking dedicated measures for improving the renewable sector, and its efforts have been satisfactory in recognizing various obstacles.

Policy and regulatory obstacles

A comprehensive policy statement (regulatory framework) is not available in the renewable sector. When there is a requirement to promote the growth of particular renewable energy technologies, policies might be declared that do not match with the plans for the development of renewable energy.

The regulatory framework and procedures are different for every state because they define the respective RPOs (Renewable Purchase Obligations) and this creates a higher risk of investments in this sector. Additionally, the policies are applicable for just 5 years, and the generated risk for investments in this sector is apparent. The biomass sector does not have an established framework.

Incentive accelerated depreciation (AD) is provided to wind developers and is evident in developing India’s wind-producing capacity. Wind projects installed more than 10 years ago show that they are not optimally maintained. Many owners of the asset have built with little motivation for tax benefits only. The policy framework does not require the maintenance of the wind projects after the tax advantages have been claimed. There is no control over the equipment suppliers because they undertake all wind power plant development activities such as commissioning, operation, and maintenance. Suppliers make the buyers pay a premium and increase the equipment cost, which brings burden to the buyer.

Furthermore, ready-made projects are sold to buyers. The buyers are susceptible to this trap to save income tax. Foreign investors hesitate to invest because they are exempted from the income tax.

Every state has different regulatory policy and framework definitions of an RPO. The RPO percentage specified in the regulatory framework for various renewable sources is not precise.

RPO allows the SERCs and certain private firms to procure only a part of their power demands from renewable sources.

RPO is not imposed on open access (OA) and captive consumers in all states except three.

RPO targets and obligations are not clear, and the RPO compliance cell has just started on 22.05.2018 to collect the monthly reports on compliance and deal with non-compliance issues with appropriate authorities.

Penalty mechanisms are not specified and only two states in India (Maharashtra and Rajasthan) have some form of penalty mechanisms.

The parameter to determine the tariff is not transparent in the regulatory framework and many SRECs have established a tariff for limited periods. The FiT is valid for only 5 years, and this affects the bankability of the project.

Many SERCs have not decided on adopting the CERC tariff that is mentioned in CERCs regulations that deal with terms and conditions for tariff determinations. The SERCs have considered the plant load factor (PLF) because it varies across regions and locations as well as particular technology. The current framework does not fit to these issues.

Third party sale (TPS) is not allowed because renewable generators are not allowed to sell power to commercial consumers. They have to sell only to industrial consumers. The industrial consumers have a low tariff and commercial consumers have a high tariff, and SRCS do not allow OA. This stops the profit for the developers and investors.

Institutional obstacles

Institutes, agencies stakeholders who work under the conditions of the MNRE show poor inter-institutional coordination. The progress in renewable energy development is limited by this lack of cooperation, coordination, and delays. The delay in implementing policies due to poor coordination, decrease the interest of investors to invest in this sector.

The single window project approval and clearance system is not very useful and not stable because it delays the receiving of clearances for the projects ends in the levy of a penalty on the project developer.

Pre-feasibility reports prepared by concerned states have some deficiency, and this may affect the small developers, i.e., the local developers, who are willing to execute renewable projects.

The workforce in institutes, agencies, and ministries is not sufficient in numbers.

Proper or well-established research centers are not available for the development of renewable infrastructure.

Customer care centers to guide developers regarding renewable projects are not available.

Standards and quality control orders have been issued recently in 2018 and 2019 only, and there are insufficient institutions and laboratories to give standards/certification and validate the quality and suitability of using renewable technology.

Financial and fiscal obstacles

There are a few budgetary constraints such as fund allocation, and budgets that are not released on time to fulfill the requirement of developing the renewable sector.

The initial unit capital costs of renewable projects are very high compared to fossil fuels, and this leads to financing challenges and initial burden.

There are uncertainties related to the assessment of resources, lack of technology awareness, and high-risk perceptions which lead to financial barriers for the developers.

The subsidies and incentives are not transparent, and the ministry might reconsider subsidies for renewable energy because there was a sharp fall in tariffs in 2018.

Power purchase agreements (PPA) signed between the power purchaser and power generators on pre-determined fixed tariffs are higher than the current bids (Economic survey 2017–2018 and union budget on the 01.02.2019). For example, solar power tariff dropped to 2.44 INR (0. 04 USD) per unit in May 2017, wind power INR 3.46 per unit in February 2017, and 2.64 INR per unit in October 2017.

Investors feel that there is a risk in the renewable sector as this sector has lower gross returns even though these returns are relatively high within the market standards.

There are not many developers who are interested in renewable projects. While newly established developers (small and local developers) do not have much of an institutional track record or financial input, which are needed to develop the project (high capital cost). Even moneylenders consider it risky and are not ready to provide funding. Moneylenders look exclusively for contractors who have much experience in construction, well-established suppliers with proven equipment and operators who have more experience.

If the performance of renewable projects, which show low-performance, faces financial obstacles, they risks the lack of funding of renewable projects.

Financial institutions such as government banks or private banks do not have much understanding or expertise in renewable energy projects, and this imposes financial barriers to the projects.

Delay in payment by the SERCs to the developers imposes debt burden on the small and local developers because moneylenders always work with credit enhancement mechanisms or guarantee bonds signed between moneylenders and the developers.

Market obstacles

Subsidies are adequately provided to conventional fossil fuels, sending the wrong impression that power from conventional fuels is of a higher priority than that from renewables (unfair structure of subsidies)

There are four renewable markets in India, the government market (providing budgetary support to projects and purchase the output of the project), the government-driven market (provide budgetary support or fiscal incentives to promote renewable energy), the loan market (taking loan to finance renewable based applications), and the cash market (buying renewable-based applications to meet personal energy needs by individuals). There is an inadequacy in promoting the loan market and cash market in India.

The biomass market is facing a demand-supply gap which results in a continuous and dramatic increase in biomass prices because the biomass supply is unreliable (and, as there is no organized market for fuel), and the price fluctuations are very high. The type of biomass is not the same in all the states of India, and therefore demand and price elasticity is high for biomass.

Renewable power was calculated based on cost-plus methods (adding direct material cost, direct labor cost, and product overhead cost). This does not include environmental cost and shields the ecological benefits of clean and green energy.

There is an inadequate evacuation infrastructure and insufficient integration of the grid, which affects the renewable projects. SERCs are not able to use all generated power to meet the needs because of the non-availability of a proper evacuation infrastructure. This has an impact on the project, and the SERCs are forced to buy expensive power from neighbor states to fulfill needs.

Extending transmission lines is not possible/not economical for small size projects, and the seasonality of generation from such projects affect the market.

There are few limitations in overall transmission plans, distribution CapEx plans, and distribution licenses for renewable power. Power evacuation infrastructure for renewable energy is not included in the plans.

Even though there is an increase in capacity for the commercially deployed renewable energy technology, there is no decline in capital cost. This cost of power also remains high. The capital cost quoted by the developers and providers of equipment is too high due to exports of machinery, inadequate built up capacity, and cartelization of equipment suppliers (suppliers join together to control prices and limit competition).

There is no adequate supply of land, for wind, solar, and solar thermal power plants, which lead to poor capacity addition in many states.

Technological obstacles

Every installation of a renewable project contributes to complex risk challenges from environmental uncertainties, natural disasters, planning, equipment failure, and profit loss.

MNRE issued the standardization of renewable energy projects policy on the 11th of December 2017 (testing, standardization, and certification). They are still at an elementary level as compared to international practices. Quality assurance processes are still under starting conditions. Each success in renewable energy is based on concrete action plans for standards, testing and certification of performance.

The quality and reliability of manufactured components, imported equipment, and subsystems is essential, and hence quality infrastructure should be established. There is no clear document related to testing laboratories, referral institutes, review mechanism, inspection, and monitoring.

There are not many R&D centers for renewables. Methods to reduce the subsidies and invest in R&D lagging; manufacturing facilities are just replicating the already available technologies. The country is dependent on international suppliers for equipment and technology. Spare parts are not manufactured locally and hence they are scarce.

Awareness, education, and training obstacles

There is an unavailability of appropriately skilled human resources in the renewable energy sector. Furthermore, it faces an acute workforce shortage.

After installation of renewable project/applications by the suppliers, there is no proper follow-up or assistance for the workers in the project to perform maintenance. Likewise, there are not enough trained and skilled persons for demonstrating, training, operation, and maintenance of the plant.

There is inadequate knowledge in renewables, and no awareness programs are available to the general public. The lack of awareness about the technologies is a significant obstacle in acquiring vast land for constructing the renewable plant. Moreover, people using agriculture lands are not prepared to give their land to construct power plants because most Indians cultivate plants.

The renewable sector depends on the climate, and this varying climate also imposes less popularity of renewables among the people.

The per capita income is low, and the people consider that the cost of renewables might be high and they might not be able to use renewables.

The storage system increases the cost of renewables, and people believe it too costly and are not ready to use them.

The environmental benefits of renewable technologies are not clearly understood by the people and negative perceptions are making renewable technologies less prevalent among them.

Environmental obstacles

A single wind turbine does not occupy much space, but many turbines are placed five to ten rotor diameters from each other, and this occupies more area, which include roads and transmission lines.

In the field of offshore wind, the turbines and blades are bigger than onshore wind turbines, and they require a substantial amount of space. Offshore installations affect ocean activities (fishing, sand extraction, gravel extraction, oil extraction, gas extraction, aquaculture, and navigation). Furthermore, they affect fish and other marine wildlife.

Wind turbines influence wildlife (birds and bats) because of the collisions with them and due to air pressure changes caused by wind turbines and habitat disruption. Making wind turbines motionless during times of low wind can protect birds and bats but is not practiced.

Sound (aerodynamic, mechanical) and visual impacts are associated with wind turbines. There is poor practice by the wind turbine developers regarding public concerns. Furthermore, there are imperfections in surfaces and sound—absorbent material which decrease the noise from turbines. The shadow flicker effect is not taken as severe environmental impact by the developers.

Sometimes wind turbine material production, transportation of materials, on-site construction, assembling, operation, maintenance, dismantlement, and decommissioning may be associated with global warming, and there is a lag in this consideration.

Large utility-scale solar plants require vast lands that increase the risk of land degradation and loss of habitat.

The PV cell manufacturing process includes hazardous chemicals such as 1-1-1 Trichloroethene, HCL, H 2 SO 4 , N 2 , NF, and acetone. Workers face risks resulting from inhaling silicon dust. The manufacturing wastes are not disposed of properly. Proper precautions during usage of thin-film PV cells, which contain cadmium—telluride, gallium arsenide, and copper-indium-gallium-diselenide are missing. These materials create severe public health threats and environmental threats.

Hydroelectric power turbine blades kill aquatic ecosystems (fish and other organisms). Moreover, algae and other aquatic weeds are not controlled through manual harvesting or by introducing fish that can eat these plants.

Discussion and recommendations based on the research

Policy and regulation advancements.

The MNRE should provide a comprehensive action plan or policy for the promotion of the renewable sector in its regulatory framework for renewables energy. The action plan can be prepared in consultation with SERCs of the country within a fixed timeframe and execution of the policy/action plan.

The central and state government should include a “Must run status” in their policy and follow it strictly to make use of renewable power.

A national merit order list for renewable electricity generation will reduce power cost for the consumers. Such a merit order list will help in ranking sources of renewable energy in an ascending order of price and will provide power at a lower cost to each distribution company (DISCOM). The MNRE should include that principle in its framework and ensure that SERCs includes it in their regulatory framework as well.

SERCs might be allowed to remove policies and regulatory uncertainty surrounding renewable energy. SERCs might be allowed to identify the thrust areas of their renewable energy development.

There should be strong initiatives from municipality (local level) approvals for renewable energy-based projects.

Higher market penetration is conceivable only if their suitable codes and standards are adopted and implemented. MNRE should guide minimum performance standards, which incorporate reliability, durability, and performance.

A well-established renewable energy certificates (REC) policy might contribute to an efficient funding mechanism for renewable energy projects. It is necessary for the government to look at developing the REC ecosystem.

The regulatory administration around the RPO needs to be upgraded with a more efficient “carrot and stick” mechanism for obligated entities. A regulatory mechanism that both remunerations compliance and penalizes for non-compliance may likely produce better results.

RECs in India should only be traded on exchange. Over-the-counter (OTC) or off-exchange trading will potentially allow greater participation in the market. A REC forward curve will provide further price determination to the market participants.

The policymakers should look at developing and building the REC market.

Most states have defined RPO targets. Still, due to the absence of implemented RPO regulations and the inadequacy of penalties when obligations are not satisfied, several of the state DISCOMs are not complying completely with their RPO targets. It is necessary that all states adhere to the RPO targets set by respective SERCs.

The government should address the issues such as DISCOM financials, must-run status, problems of transmission and evacuation, on-time payments and payment guarantees, and deemed generation benefits.

Proper incentives should be devised to support utilities to obtain power over and above the RPO mandated by the SERC.

The tariff orders/FiTs must be consistent and not restricted for a few years.

Transmission requirements

The developers are worried that transmission facilities are not keeping pace with the power generation. Bays at the nearest substations are occupied, and transmission lines are already carrying their full capacity. This is due to the lack of coordination between MNRE and the Power Grid Corporation of India (PGCIL) and CEA. Solar Corporation of India (SECI) is holding auctions for both wind and solar projects without making sure that enough evacuation facilities are available. There is an urgent need to make evacuation plans.

The solution is to develop numerous substations and transmission lines, but the process will take considerably longer time than the currently under-construction projects take to get finished.

In 2017–2018, transmission lines were installed under the green energy corridor project by the PGCIL, with 1900 circuit km targeted in 2018–2019. The implementation of the green energy corridor project explicitly meant to connect renewable energy plants to the national grid. The budget allocation of INR 6 billion for 2018–2019 should be increased to higher values.

The mismatch between MNRE and PGCIL, which are responsible for inter-state transmission, should be rectified.

State transmission units (STUs) are responsible for the transmission inside the states, and their fund requirements to cover the evacuation and transmission infrastructure for renewable energy should be fulfilled. Moreover, STUs should be penalized if they fail to fulfill their responsibilities.

The coordination and consultation between the developers (the nodal agency responsible for the development of renewable energy) and STUs should be healthy.

Financing the renewable sector

The government should provide enough budget for the clean energy sector. China’s annual budget for renewables is 128 times higher than India’s. In 2017, China spent USD 126.6 billion (INR 9 lakh crore) compared to India’s USD 10.9 billion (INR 75500 crore). In 2018, budget allocations for grid interactive wind and solar have increased but it is not sufficient to meet the renewable target.

The government should concentrate on R&D and provide a surplus fund for R&D. In 2017, the budget allotted was an INR 445 crore, which was reduced to an INR 272.85 crore in 2016. In 2017–2018, the initial allocation was an INR 144 crore that was reduced to an INR 81 crore during the revised estimates. Even the reduced amounts could not be fully used, there is an urgent demand for regular monitoring of R&D and the budget allocation.

The Goods and Service Tax (GST) that was introduced in 2017 worsened the industry performance and has led to an increase in costs and poses a threat to the viability of the ongoing projects, ultimately hampering the target achievement. These GST issues need to be addressed.

Including the renewable sector as a priority sector would increase the availability of credit and lead to a more substantial participation by commercial banks.

Mandating the provident funds and insurance companies to invest the fixed percentage of their portfolio into the renewable energy sector.

Banks should allow an interest rebate on housing loans if the owner is installing renewable applications such as solar lights, solar water heaters, and PV panels in his house. This will encourage people to use renewable energy. Furthermore, income tax rebates also can be given to individuals if they are implementing renewable energy applications.

Improvement in manufacturing/technology

The country should move to domestic manufacturing. It imports 90% of its solar cell and module requirements from Malaysia, China, and Taiwan, so it is essential to build a robust domestic manufacturing basis.

India will provide “safeguard duty” for merely 2 years, and this is not adequate to build a strong manufacturing basis that can compete with the global market. Moreover, safeguard duty would work only if India had a larger existing domestic manufacturing base.

The government should reconsider the safeguard duty. Many foreign companies desiring to set up joint ventures in India provide only a lukewarm response because the given order in its current form presents inadequate safeguards.

There are incremental developments in technology at regular periods, which need capital, and the country should discover a way to handle these factors.

To make use of the vast estimated renewable potential in India, the R&D capability should be upgraded to solve critical problems in the clean energy sector.

A comprehensive policy for manufacturing should be established. This would support capital cost reduction and be marketed on a global scale.

The country should initiate an industry-academia partnership, which might promote innovative R&D and support leading-edge clean power solutions to protect the globe for future generations.

Encourage the transfer of ideas between industry, academia, and policymakers from around the world to develop accelerated adoption of renewable power.

Awareness about renewables

Social recognition of renewable energy is still not very promising in urban India. Awareness is the crucial factor for the uniform and broad use of renewable energy. Information about renewable technology and their environmental benefits should reach society.

The government should regularly organize awareness programs throughout the country, especially in villages and remote locations such as the islands.

The government should open more educational/research organizations, which will help in spreading knowledge of renewable technology in society.

People should regularly be trained with regard to new techniques that would be beneficial for the community.

Sufficient agencies should be available to sell renewable products and serve for technical support during installation and maintenance.

Development of the capabilities of unskilled and semiskilled workers and policy interventions are required related to employment opportunities.

An increase in the number of qualified/trained personnel might immediately support the process of installations of renewables.

Renewable energy employers prefer to train employees they recruit because they understand that education institutes fail to give the needed and appropriate skills. The training institutes should rectify this issue. Severe trained human resources shortages should be eliminated.

Upgrading the ability of the existing workforce and training of new professionals is essential to achieve the renewable goal.

Hybrid utilization of renewables

The country should focus on hybrid power projects for an effective use of transmission infrastructure and land.

India should consider battery storage in hybrid projects, which support optimizing the production and the power at competitive prices as well as a decrease of variability.

Formulate mandatory standards and regulations for hybrid systems, which are lagging in the newly announced policies (wind-solar hybrid policy on 14.05.2018).

The hybridization of two or more renewable systems along with the conventional power source battery storage can increase the performance of renewable technologies.

Issues related to sizing and storage capacity should be considered because they are key to the economic viability of the system.

Fiscal and financial incentives available for hybrid projects should be increased.

The renewable sector suffers notable obstacles. Some of them are inherent in every renewable technology; others are the outcome of a skewed regulative structure and marketplace. The absence of comprehensive policies and regulation frameworks prevent the adoption of renewable technologies. The renewable energy market requires explicit policies and legal procedures to enhance the attention of investors. There is a delay in the authorization of private sector projects because of a lack of clear policies. The country should take measures to attract private investors. Inadequate technology and the absence of infrastructure required to establish renewable technologies should be overcome by R&D. The government should allow more funds to support research and innovation activities in this sector. There are insufficiently competent personnel to train, demonstrate, maintain, and operate renewable energy structures and therefore, the institutions should be proactive in preparing the workforce. Imported equipment is costly compared to that of locally manufactured; therefore, generation of renewable energy becomes expensive and even unaffordable. Hence, to decrease the cost of renewable products, the country should become involve in the manufacturing of renewable products. Another significant infrastructural obstacle to the development of renewable energy technologies is unreliable connectivity to the grid. As a consequence, many investors lose their faith in renewable energy technologies and are not ready to invest in them for fear of failing. India should work on transmission and evacuation plans.

Inadequate servicing and maintenance of facilities and low reliability in technology decreases customer trust in some renewable energy technologies and hence prevent their selection. Adequate skills to repair/service the spare parts/equipment are required to avoid equipment failures that halt the supply of energy. Awareness of renewable energy among communities should be fostered, and a significant focus on their socio-cultural practices should be considered. Governments should support investments in the expansion of renewable energy to speed up the commercialization of such technologies. The Indian government should declare a well-established fiscal assistance plan, such as the provision of credit, deduction on loans, and tariffs. The government should improve regulations making obligations under power purchase agreements (PPAs) statutorily binding to guarantee that all power DISCOMs have PPAs to cover a hundred percent of their RPO obligation. To accomplish a reliable system, it is strongly suggested that renewables must be used in a hybrid configuration of two or more resources along with conventional source and storage devices. Regulatory authorities should formulate the necessary standards and regulations for hybrid systems. Making investments economically possible with effective policies and tax incentives will result in social benefits above and beyond the economic advantages.

Availability of data and materials

Not applicable.

Abbreviations

Accelerated depreciation

Billion units

Central Electricity Authority of India

Central electricity regulatory commission

Central financial assistance

Expression of interest

Foreign direct investment

Feed-in-tariff

Ministry of new and renewable energy

Research and development

Renewable purchase obligations

State electricity regulatory

Small hydropower

Terawatt hours

Waste to energy

Chr.Von Zabeltitz (1994) Effective use of renewable energies for greenhouse heating. Renewable Energy 5:479-485.

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Kumar. J, C.R., Majid, M.A. Renewable energy for sustainable development in India: current status, future prospects, challenges, employment, and investment opportunities. Energ Sustain Soc 10 , 2 (2020). https://doi.org/10.1186/s13705-019-0232-1

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India Renewable Integration Study

An NREL grid integration study has confirmed the technical and economic viability of integrating 175 gigawatts (GW) of renewable energy into India's electricity grid by 2022.

The visualization of results shows a full year of generation and transmission flows.

The two-volume report Greening the Grid: Pathways To Integrate 175 Gigawatts of Renewable Energy into India's Electric Grid Vol. I—National Study and Vol. II—Regional Study resolves many questions about how India's electricity grid can manage the variability and uncertainty of India's 2022 renewable energy (RE) target of 175 GW of installed capacity, including 100 GW of solar and 60 GW of wind, up from 9 GW of solar and 29 GW of wind installed in early 2017.

Using advanced weather and power system modeling, the study explored operational impacts of meeting India's 2022 targets and identified actions that are favorable for integration.

The National Study used a state-of-the-art production cost model, which simulates optimal scheduling and dispatch of available generation by minimizing total production costs subject to physical, operational, and market constraints. The objective was to simulate the scheduling and dispatch decisions that are based on variable or production costs. We developed this model to identify how the Indian power system is balanced every 15 minutes in a future year (2022). The model quantifies RE generation, including variability and curtailment, changes in least-cost scheduling and dispatch, flexibility of thermal generation, and periods of stress. To investigate system operations in each of the states with the potential for significant growth in RE capacity, the study team also used a higher-resolution regional model that includes intrastate transmission details. This model—the focus of Vol. II—builds upon the same inputs in the national model but with increased transmission detail within each of the states in the Southern and Western regions plus Rajasthan. Therefore, the regional model provides more robust views of localized operations and can offer more relevant insights to support state-level planning.

The results demonstrate that power system balancing with 100 GW solar and 60 GW wind is achievable at 15-minute operational timescales with minimal RE curtailment. India's current coal-dominated power system has the inherent flexibility to accommodate the variability associated with the targeted RE capacities, and coal flexibility in low-RE, coal-dominant states can play an important role in facilitating RE integration nationwide.

The study results reveal operational impacts, such as:

• The 160 GW of solar and wind capacity can serve 22% of India's power demand, providing benefits of fuel savings and reduced emissions.
• The power system as planned for 2022 is able to manage the added variability of wind and solar; new, fast-ramping infrastructure (such as natural gas turbines) is not necessary to maintain balance.
• In a system with 160 GW of wind and solar, coal plants, on average, operate at only half their capacity, suggesting the potential role for a new tariff structure that moves away from focusing on energy delivery and instead compensates plants for performance that achieves flexibility goals.

The study also evaluates the value of strategies to better integrate RE and demonstrates the importance of policy and market planning. The results of the study indicate that:

• National and regional coordination of scheduling and dispatch eases renewable energy integration and results in cost savings by smoothing variability and broadening the supply of system flexibility.
• Flexibility of India's coal fleet is critical to minimizing curtailment of renewable energy.

This work is conducted under a broader program, Greening the Grid, which is an initiative co-led by India's Ministry of Power and the U.S. Agency for International Development, and includes co-sponsorship from the 21st Century Power Partnership and the World Bank's Energy Sector Management Assistance Program. The modeling team comprised a core group from the Power System Operation Corporation Limited, which is the national grid operator (with representation from the National, Southern, and Western Regional Load Dispatch Centers), National Renewable Energy Laboratory, and Lawrence Berkeley National Laboratory, and a broader modeling team drawn from Central Electricity Authority, POWERGRID (the central transmission utility), and state load dispatch centers in Maharashtra, Gujarat, Rajasthan, Tamil Nadu, Karnataka, and Andhra Pradesh. Technical stakeholder review was provided by three teams of Grid Integration Review Committees consisting of more than 150 power system stakeholders from across India.

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• Published: 21 September 2022

The role of renewables for rapid transitioning of the power sector across states in India

• Ashish Gulagi   ORCID: orcid.org/0000-0003-3440-1577 1 ,
• Manish Ram   ORCID: orcid.org/0000-0001-5598-0817 1 ,
• Dmitrii Bogdanov   ORCID: orcid.org/0000-0001-7136-4803 1 ,
• Sandeep Sarin 2 ,
• Theophilus Nii Odai Mensah 1 &
• Christian Breyer   ORCID: orcid.org/0000-0002-7380-1816 1  

Nature Communications volume  13 , Article number:  5499 ( 2022 ) Cite this article

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• Energy economics
• Energy modelling
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• Renewable energy

Recent events like heatwaves and abnormal rainfall are a glimpse of the devastating effects of human induced climate change. No country is immune to its effects, but a developing country like India is particularly vulnerable. This research, for the individual states of India, explores the technical feasibility and economic viability of a renewable transition pathway for the power sector. Based on the assumptions of this study, we show that a renewables-based power system by 2050 is lower in cost than the current  coal dominated system, has zero greenhouse gas emissions and provides reliable electricity to around 1.7 billion people. Electricity generation will be based on solar PV, wind energy, and hydropower, while batteries and multi-fuel reciprocating internal combustion engines based on synthetic fuels provide the required flexibility to the power system. This transition would address  multiple imperatives: affordability, accessibility, and sustainability without compromising economic growth.

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Introduction

Recent changes in the extremity and abnormality of weather events like heatwaves in the northern hemisphere and extreme rainfall in Europe and Asia have renewed focus on climate change 1 , 2 , 3 , 4 . These extreme and abnormal weather-related events are felt far and wide, as no country is immune to their  devastating effects, but a developing country like India is more vulnerable. India has its own share of extreme and untimely rainfalls, heatwaves and droughts, which are growing by every passing year 5 , 6 , 7 , a result of human-induced climate change. The consequences are extreme; socially and financially. The latest climate report from the Intergovernmental Panel on Climate Change (IPCC) finds that ‘it is now unequivocal that human-caused emissions from burning fossil fuels are responsible for recent warming’ 5 . Though countries have ratified the Paris Agreement and pledged their Intended Nationally Determined Contributions (INDCs), recent climate events show that more ambitious targets are needed. Therefore, the first and foremost step is a shift away from the dependence on fossil fuels, especially in the power sector towards renewable energy at a faster rate than ever.

In this context, India’s path towards achieving the 1.5 °C target needs to be in synergy with its development imperatives; energy affordability and accessibility, mitigating air pollution, while maintaining rapid economic development 8 . Even though, historically, India has had lower per capita emissions than other developed countries, it has been at the forefront of the global climate debate 9 . In this regard, India has committed to reducing the greenhouse gas (GHG) emissions intensity of its GDP by 33-35% below 2005 levels and achieving 40% of cumulative installed power generation capacity from non-fossil sources by 2030 10 , 11 . To further its global climate commitment and leadership, it has pledged at the UN Climate Summit in 2019 a target of 450 GW of renewable energy (RE) to be achieved by 2030 12 . However, the challenge for India going forward will be to align its renewable growth trajectory with its social and economic development priorities. It is vital to set long-term goals and envision a net zero emission energy system across the country, which will not only ensure economic benefits but also place India in a position of global climate leadership. In recent years, India has taken remarkable strides in reforming its power sector, with electricity shortages declining and an electrification of 99.9% of the households across the country 13 . However, there is still a long way to go in reaching the standards of the developed world in terms of reliability and per capita consumption. The per capita electricity consumption within the Indian states and union territories differs a lot but is less than the global average of almost 3000 kWh 14 . As of 2020 15 , the average per capita electricity consumption in India is only 1200 kWh. A dynamic growth in future electricity demand is projected over the coming years, escalated by the growing economy and end-use services 16 , despite the government’s efforts to pursue strong energy efficiency standards 17 . This research focuses only on the power sector, while other sectors such as heat and transport will further increase the electricity demand. In its INDC, it is mentioned that ‘half of the India of 2030 is yet to be built’ 11 . Thus, India’s power generation choices will have implications on its long-term emissions locally and globally.

Historically, the power sector in India has been the largest contributor to energy-related GHG emissions. The dependence on low-quality coal used in highly inefficient power plants has resulted in air pollution, predominant in cities and aggravating other environmental issues 18 . Additionally, many of these coal power plants are operating at lower plant load factors (PLF), thus reducing their profitability and compounding their already dwindling financial returns 14 . Already, solar PV-based electricity generation ranges between 1.99 and 2.36 INR/kWh (24.8–29.5 €/MWh), as compared to electricity from domestic coal-fired power plants costing 3.5–5 INR/kWh (43.7–62.5 €/MWh). To complicate the matter further, under-construction coal power plants will add to the financial burden of already cash-strapped distribution companies, as these inflexible assets cannot compete with low-cost solar-based electricity 19 . On the other hand, private investors are shying away from coal investments due to the associated risks and are shifting towards sustainable technologies 20 . This has resulted in many coal power projects being scrapped or abandoned 21 .

Another issue with coal power plants is the use of freshwater for cooling. India, currently, is placed 13 th among the world’s ‘extremely water stressed countries’ and most of its states are facing depleting freshwater resources. It is projected that two-thirds of the country’s power plants will face high water stress by the end of 2030 22 . About 40% of coal power plants are located in these water-stressed areas across the country, while the total water requirement for thermal cooling makes up more than half of the domestic water demand 23 , 24 . Consequently, water shortages or drought-like situations have resulted in thermal power plant shutdowns, resulting in a loss of 1.4 bUSD (1.3 b€) between 2013 and 2016, due to lack of fresh water available for cooling 25 . With the population predicted to grow, there will be an increase in irrigation requirements, which will put tremendous pressure on already scarce water resources 26 . Competing uses of freshwater for vital irrigation and electricity generation in thermal power plants cause immense challenges for decision-makers. These factors, together with India’s ambitious climate change goals and record low solar and wind energy prices, have made thermal power plants unviable in the long term, with high risks of being stranded assets. Therefore, with a view on these impacts, in this study, it is assumed that there will be no new coal or fossil fuel-based power plants built in the future to focus on a least cost and best policy scenario.

India is one of the countries that has been aggressively pursuing renewable capacity installations. For the past few years, significant growth has been observed in solar and wind installations. To put this in context, solar capacity has grown 13 times in the last six years 27 , reaching approximately 45.6 GW by August 2021 28 . This growth aptly reflects the government’s plan to cash in on the declining costs and significant solar potential available in the country. Even in its integrated energy policy, the government has put forth that solar energy is the way forward for India 29 . This indicates that the trend of growing renewable capacity installations will continue amid sharp falling costs and supportive policies from the central as well as state governments. Saraswat and Digalwar 30 assessed the sustainability of various energy resources in India, with empirical investigations and validation of sustainability indicators. Solar energy ranked as the most sustainable energy resource, followed by wind energy, while the least sustainable energy resources were thermal and nuclear. As highlighted by Child et al. 31 , the benefits of utilising renewables go beyond the energy sector, and solar and wind are the foremost technologies to achieve sustainability goals.

However, to achieve the ambitious target of 450 GW of renewables, more needs to be done in some of the states and policies need to be aligned with the ambitions of the central government. The role of renewables in electricity generation is highly variable within the states of India. For example, the share of renewables in electricity generation from renewable energy-rich states like Andhra Pradesh, Gujarat, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu and Telangana is considerably higher than the national average of 8.2% 17 . Figure  1 shows the share of solar and wind electricity in total generation across all major states of India in 2020. The states of Karnataka, Tamil Nadu, and Rajasthan have considerable generation from solar and wind, while other states are still lagging in capacity and generation. Clearly, action will be required at both the state and national level to achieve the goals

The x and y axis represent VRE share of capacity and generation in each state’s total capacity and generation respectively. The bubble size represents the share of electricity generation by VRE in each state with respect to the total electricity generation in India. Tamil Nadu has the highest share of VRE in total India generation. Karnataka has the highest share of capacity and generation among all the states. Abbreviations: AP Andhra Pradesh, BR Bihar, CH Chhattisgarh, DL New Delhi, GJ Gujarat, Daman and Dadra, HP Himachal Pradesh, HR Haryana, JH Jharkhand, JK Jammu-Kashmir, KA Karnataka, KL Kerala, MHGA Maharashtra and Goa, MP Madhya Pradesh, NE North Eastern states, OR Odisha, PBCH Punjab and Chandigarh, RJ Rajasthan, TG Telangana, TNPY Tamil Nadu and Puducherry, UP Uttar Pradesh, UT Uttarakhand, WBSK West Bengal and Sikkim.

As India plans to achieve its ambitious economic goals and climate change targets, the power sector assumes an important role, as decarbonization of the power sector is key for reducing CO 2 emissions by mid-century. According to Bistline et al. 32 , power sector decarbonization will play a vital role in the complete decarbonization of the energy system through direct electrification of the processes and indirect electrification – electricity derived fuels. Likewise, a recent study on an energy transition pathway for India acknowledges the huge role of electricity as a key vector in final energy demand to achieve net-zero emissions by 2050 33 . As a result, failure to deeply decarbonize the power sector before mid of this century will seriously jeopardize ongoing global climate mitigation efforts 34 .

Various long-term transition studies on the emission reduction pathways for India have been conducted. Most of these studies, however, first, focus only on a national level 35 , second, lack a high temporal and spatial resolution of resources and power demand 36 , 37 , third, contain no or limited storage and flexibility options 38 , fourth, lack a transition pathway, showing how the current system will ‘transition’ towards a system with high shares of renewables 39 , and finally, consider limited share of renewable penetration 39 , 40 . Some of the key studies such as WWF and TERI 41 , Teske et al. 42 , 43 , Jacobson et al. 44 , Lawrenz et al. 36 , Gulagi et al. 45 and Bogdanov et al. 46 , 47 , consider 100% renewable energy penetration, however, they lack in one or the other aspects mentioned above.

Considering the importance of the power sector, this study explores a rapid transition pathway for the power sector of India in a resolution of states from the current power system till 2050 in a 5-year time interval towards integrating large shares of renewables. There is a clear need for a transition pathway of the power sector beyond India’s target of 2030. This paper presents a cost-optimal transition pathway integrating various generation options, storage technologies and interstate transmission to meet the hourly power demand for an entire year. This paper answers two important questions, first, is a 100% renewable energy-based power system technically possible and is it the least cost option in 2050? Second, how much and what are the generation capacities, storage, and flexibility requirements on a state and national level during the transition?

To explore the power sector transition pathway, India was divided into 22 states/regions (henceforth, the individual states and the states combined together will be called as ‘states’), which are grouped into four major regional grids (Northern, Western, Southern and a combined Eastern and North Eastern) that are further interconnected to form a national transmission network, as highlighted in Methods Fig.  9 . The North Eastern grid is combined with the Eastern grid due to the relative size of its power system in the total electricity demand. Similarly, states in the Northeast of India are combined into one region of ‘Northeast’ and the Union Territories except Delhi, are combined with the adjacent states.

Results and Discussion

Capacity expansion during the transition.

The cost optimal electricity generation capacities, which satisfy hourly demand in each of the regions are summarised in Fig.  2 . The results show significant growth in optimal capacities of solar PV and wind power across all the states.

Solar PV capacity increases in all the states during the transition and is the main source of electricity generation, with a share of about 77% in the total installed capacity across India in 2050.

During the first decade of the transition, significant growth in solar PV capacities is observed in the larger states of Uttar Pradesh (82 GW) and Maharashtra (78 GW), a reflection of excellent solar resource availability and huge capacities required as replacement for decreased coal generation to satisfy the growing power demand. However, the highest average annual growth rates of solar PV installations are observed in Himachal Pradesh (228%), Jammu and Kashmir (125%) and Delhi (111%) in the Northern grid, Kerala (122%) in the Southern grid, West Bengal (121%) and Jharkhand (102%) in the Eastern grid. As hydropower is seasonal and increasing its capacity is comparatively expensive and time-consuming, the northern states, dependent on it, start investing and building solar PV at a faster rate than other states. On the other hand, the Eastern states dependent on coal, start investing in new solar PV capacities as it is the cheapest source of new electricity, saving on carbon emission costs for these states and corresponding GHG emissions. Growth in rooftop PV installation is observed across all states, particularly in Delhi, where land area is limited, and a large potential for rooftop PV is available. During the same period, wind resource-rich states observe the largest increase in wind energy installations. In absolute capacities, Gujarat (38 GW) and Maharashtra (30 GW) install wind turbines due to the availability of excellent wind resources. Installation of wind capacities is also observed in other states like Himachal Pradesh, Punjab, Haryana, and Uttar Pradesh, where the current installed capacities are negligible. Newer turbines with higher hub heights increase the capacity factors at these locations to make them more cost-competitive compared to other fossil and renewable sources of electricity generation. Additionally, during this period, as batteries are yet to be cost competitive and the dependence of solar PV on batteries to supply night-time demand, enables wind energy to see the highest growth.

From 2030 onwards, solar PV has a steady average annual growth rate of 35% across the states of India, as solar PV supported by batteries dominate the installed capacities, reaching almost 3000 GW by 2050. On the other hand, annual growth in wind capacities slows down during this period due to  better cost competitiveness of solar PV. With excellent resource availability across the length and breadth of India and a continuous decrease in cost, solar PV emerges as the major source of electricity generation in all the states in 2050, as seen from the Supplementary Information Fig.  5 . Total wind capacity in the country by 2050 is about 410 GW. Regions with good exploitable hydropower potential, like the Northern and Eastern states, will see the maximum growth in hydropower capacities during the transition. Detailed data on installed capacities for each of the states for all generation technologies till 2050 in every 5-year interval is given in Supplementary Information Table  5 .

Shares of fossil fuels and coal decline through the transition, with installed capacities of coal at risk of becoming stranded assets. These coal power plants have very low full load hours during the transition years, as the share of renewables increases, which will lead to reduced revenues and profitability. At the same time, if these coal power plants were made to operate flexibly, additional new investments would be required 17 . These additional investments should be compared, first, against other flexibility sources such as batteries, multi-fuel reciprocating internal combustion engines (ICE) and grids, which can support very high shares of VRE with faster ramp rates, and second, against climate change goals. Even retrofitting old coal power plants to operate flexibly will result in emissions. From the results, gas turbines and reciprocating multi-fuel ICE are installed by 2030 to provide flexibility to the system, which is already over 60% renewable energy based. These flexible generation sources ramp up and down, providing instantaneous demand cover, especially for the evening peaks. The increase in utilisation and capacity of interstate transmission networks adds an additional dimension of flexibility to the power system. Expansion of the transmission system smooths out the resource variability and provides access to low-cost electricity from other states 48 . As a result, local storage requirements and curtailment are reduced. The total grid capacity increases to 308 GW for a full renewable energy-based power system in 2050. Grid capacity expansion of all the transmission lines considered in this study for every 10-year period of the transition is given in Supplementary Information Table  6 . On the other hand, it is assumed that as the inter-state transmission grid grows during the transition, simultaneously, necessary upgrades and improvements are made within each state’s grid network, as low cost electricity is available to each of the end-users.

Electricity generation during the transition

The cost-optimal contribution of different generation sources in all states across India is illustrated in Fig.  3 . The share of coal in electricity generation decreases across most of the states by more than 60% in 2030. Notably, more than 80% decrease is observed in Punjab, Haryana, and Delhi in the Northern grid, Kerala, and Karnataka in the Southern grid and Northeastern states. However, states with high electricity demand, such as Gujarat and Maharashtra, and states within the traditional coal belt; Odisha, West Bengal and Jharkhand, still have a considerable share of coal generation in comparison to the rest of the states in India. On a national level, beyond 2020, as the share of coal continues to drop, first the share of wind energy in 2025 (27%) and then solar PV in 2030 (43%), increase in total electricity generation, as they become more cost competitive. This is also observed at the individual state level, where, first, electricity generation from wind energy picks up due to its high capacity factors and its availability at night. However, after 2030, as the cost competitiveness of hybrid PV-battery systems increases, solar PV will account for  the largest share of electricity generation. Round-the-clock Power Purchase Agreements (PPAs) are already on the rise across different parts of India to capture the cost decrease of hybrid PV-battery power solutions and provide night-time demand 49 . The higher share of solar electricity generation could enhance the resource complementarity across the states in an interconnected power system, thus neutralising the effects of the monsoon season 48 . On a national level in 2050, the major contribution to total power production are from solar (73%), wind (19%), with hydropower (3%) and nuclear power (0.4%) complementing VRE.

Transition from a coal-based to renewable energy based power system is rapid during the first decade. Electricity generated from solar PV has a share of about 73% in the total electricity generation across India in 2050.

Multi-fuel ICEs, in 2050, have a share of 1.1% in electricity generation, driven by higher efficiency and lower cost, while having full load hours of over 800, mainly utilised for peak supply and balancing. Detailed generation data from different technologies is provided in the Supplementary Information Table  9 .

It is quite evident that the Indian power sector is undergoing a rapid transition away from coal towards solar PV as the prime source of electricity generation as electricity from solar PV is the least cost. The trends during the last few years with record low tariffs across the country are already disrupting the economics of the power sector. With low-cost storage solutions, this trend is expected to be further amplified.

Storage deployment during the transition

Supplementary Information Table  9 summarises the installed capacities and output during the transition in a cost-optimal power system for all storage technologies considered. The table shows that storage plays a vital role in enabling a smooth and secure hourly power supply across all the states during the transition. As of 2020, pumped hydro energy storage (PHES) is the only storage option that is available and used, albeit in only some of the states. However, the installed capacity and output is low and future projects have been stalled for various reasons, such as social and environmental 50 . During the transition, cost-optimal investments are made in batteries and gas storage on a large scale rather than PHES. Large scale storage requirements start in 2030.  However, this could very well take shape earlier with the right policy framework and incentives. In this research, storage capacities are initiated when the capacity share of renewables is more than 60%. Batteries perfectly complement the large share of solar PV in the generation due to their modularity, finally forming utility-scale hybrid PV-battery systems, while gas storage is used seasonally. The installed electricity storage capacity increases from about 22 TWh in 2030 to around 95 TWh by 2050, as shown in Fig.  4 . Utility-scale and prosumer batteries contribute to a major share of the electricity storage output, with more than 98% by 2050, due to their low cost and high round trip efficiency, as diurnal storage requirements increase considerably by 2050.

The installed storage capacities are based on gas storage and the output is based on batteries, which is a consequence of structurally different charge-discharge cycles of short-term and seasonal storage technologies.

On the other hand, gas storage, which is e-methane produced via the power-to-gas process, has large capacities but very few discharge cycles as compared to batteries. In a power-to-gas process, renewable electricity is used to capture carbon dioxide (CO 2 ) from the air using direct air capture units and in the process of electrolysis, separating hydrogen (H 2 ) from water. In the next step, these two gases are combined in a methanation process to produce synthetic methane (e-methane). The low capex of gas storage results in large capacities being installed during the transition, but only contributes to the vital seasonal storage through the transition. On a national level, it plays an important role when solar resource is at its lowest. Gas storage discharges slowly over the late monsoon and winter periods and is completely discharged till the end of winter. The excess electricity generated during the summer months is used to produce e-methane and charge the gas storage. Gas storage is completely charged till the end of summer. Hydropower reservoirs are charged completely during the monsoon and, similar to gas storage, provide complementarity to solar and wind generation but are mainly used for seasonal balancing. The state-of-charge (SoC) profiles for 2050 are provided for batteries, gas storage, and hydropower reservoirs in Supplementary Information Fig.  4 .

On a regional level, in a fully renewable energy system in 2050, the storage capacities are well distributed across the regions of India. The installed storage capacities are dominated by gas storage that is mainly to provide seasonal storage, while the output is dominated by utility-scale and prosumer batteries (refer to Supplementary Information Fig.  6 ). Figure  5 shows the share of storage output in electricity generation across each region. Rajasthan has the largest share, with 70% of storage output in electricity generation among all the states. Given its geographic location with continuous and cheap solar availability throughout the year, batteries are needed on a diurnal cycle, while gas storage acts as an additional source of flexibility for balancing mainly seasonal unavailability of solar energy in events such as sandstorms. At the national level, battery output contributes an average of over 35% of electricity generation in 2050, as shown in Fig.  5 . Rajasthan and Delhi have the largest shares of battery discharge in each of the regions’ total electricity generation. Utility-scale batteries form the major share in Rajasthan, while in Delhi it is prosumer batteries that are installed. Both reflect the type of solar PV capacity installed in these states.

The aggregated average storage supply share is 22% of the total electricity generated, while the battery supply share is 99% of the total storage output.

Electrolysers play a vital role in the production of hydrogen during the transition of the power system across the states of India and reach an installed capacity of 407 GW el in 2050. The major capacities are in the solar-rich states of Rajasthan, Karnataka and Uttar Pradesh, with minor capacities in the rest of the states across the country, as shown in Supplementary Information Fig.  5 . Electrolysers not only produce hydrogen, which is a fuel as well as feedstock for the production of e-fuels, but also provide crucial flexibility to the power system through the transition.

Import and Export of electricity in 2050

In a cost-optimised power system across India, transmission and distribution play a vital role in mitigating the variability of renewable resources. Thus, all states benefit from reduced investments in storage and other flexibility options while at the same time reducing the overall system costs. A strong regional grid is vital for all states to benefit from the low-cost renewable energy resources across the entire country. The power transmission capacity increases by more than six times from 2020 to 2050, as shown in Supplementary Information Fig.  8 . The interregional exchange of electricity across India in 2050 is shown in Supplementary Information Fig.  9 . On a seasonal scale, grid utilisation is predominantly high during the monsoon season 48 , while on a daily and weekly basis, high utilisation (hourly electricity transfer/(grid capacity·8760 h)) is observed during the morning and night hours. During a regular day, with good solar resource availability across the country, the least utilisation is observed during the noon hours, as direct electricity is used to satisfy the demand (refer to Supplementary Information Fig.  8 ).

Himachal Pradesh (227 TWh), Rajasthan (103 TWh) and Karnataka (116 TWh) are major net exporters of electricity, while Punjab and Chandigarh (116 TWh), Delhi (122 TWh), Maharashtra and Goa (110 TWh) and Tamil Nadu and Puducherry (116 TWh) are major net importers. Export states have excellent low-cost renewables-based electricity generation, particularly solar, wind and hydropower, which are exported, thus reducing the overall cost of storage and curtailment in these export states. Delhi, one of the largest populated cities by 2050, but with limited area and renewable energy resources, depends on neighbouring states to satisfy its electricity demand in 2050. The transmission line between Delhi and Haryana has the highest utilisation of 79% through the entire year, supplying about 121 TWh of electricity. These electricity imports play a crucial role in ensuring a steady supply of electricity throughout the year.

The share of inter-state traded electricity reaches about 12% of the total generation in 2050, clearly indicating that the majority of electricity demand across the individual states is supplied within the respective states. This implies that despite the overall interconnectedness of states across the country, each state utilises locally available renewable resources to a large extent, ensuring robust power systems even at the state level. Figure  6 gives detailed information on the power exchange between states in 2050. Supplementary Information Tables  6 - 8 gives information on the capacity, electricity exchange and utilisation of each transmission line respectively.

The annual net exchange of electricity across India is around 823 TWh, which is 12% of the electricity generated in 2050.

Seasonal power system analysis

A fully renewables-based power system across India has distinctive operational characteristics, which vary according to the states and seasonal patterns. Two important and distinctive seasonal variations, summer and monsoon, are considered to show the operational characteristics of a fully renewable energy based power system across India in 2050. Figure 10 in the Supplementary Information shows a representative week in summer and the monsoon season for an aggregated all India power system.

During the summer period, the major generation is from solar PV, complemented by wind energy. Significant curtailment (shown as excess) of solar and wind energy is seen on a daily basis. In the summer months, hourly curtailment can be as high as 33% of VRE-generated electricity. However, when integrated over an entire year, overall curtailment is down to 8.7%. This curtailment of electricity can be reduced by an integrated energy system, enhanced by the coupling of heat, transport and industrial sectors 51 . Storage plays an important role, especially, batteries, which are used on a daily basis, charging during the day and discharging during the evening and night hours to meet peak consumption, as highlighted in Fig. 10 of the Supplementary Information.

During the monsoon period, solar PV generation decreases, while wind generation increases and becomes the main source of electricity generation. Notably, excess electricity generation also decreases. Other renewable energy sources such as hydropower and dispatchable bioenergy support the lack of solar PV and wind generation. Reciprocating multi-fuel ICE are utilised in periods of low VRE generation, especially at the beginning of the week when wind generation is low and when solar generation is also low in the mid and end of the week, as shown in Supplementary Information Fig.  10 .

Imports and exports of electricity between states of the country play a vital role in the monsoon season, while electricity exchange is rather limited in summer. The amount of excess electricity is lower in the monsoon season as compared to the summer season.

Implications on costs and investments during the transition

The operating costs of the entire power system, including capital investments, operational expenditures, fuel costs, grid expansion costs and CO 2 emission costs during the transition are given in Fig.  7 . On a national level, capital expenditures increase through the transition, with wind and reciprocating multi-fuel ICE, and later with solar and batteries being dominant. During the initial years, wind energy, due to its cost competitiveness and higher capacity factors, and solar PV are installed. However, after 2030, solar PV and batteries will become cost competitive to other generation sources, due to rapidly decreasing costs. Investments in building new transmission lines start as early as 2025 and 2030, to provide the required flexibility to a rapidly changing power system.

The highest investments take place in 2025, when the system needs to invest the most in building a new renewable energy based power system, as fossil fuels based technologies are decommissioned and restrictions on new installations. A fully renewable energy based power system in 2050 is cheaper in cost than the current fossil fuel based system.

The levelised cost of electricity declines from around 71 €/MWh in 2020 (includes CO 2 emissions costs) to around 38 €/MWh by 2050 (refer Fig.  7 ) and is increasingly dominated by capital costs as fuel costs continue to decline through the transition period, which could mean increased self-reliance in terms of energy for India by 2050. Notably, the levelised cost of a fully renewable power system decreases by 46% compared to a system with 70% coal generation. Even without CO 2 emission costs 52 , the decrease is about 30%. This indicates that a rapid transition of the Indian power system is simply a case of sound economics, but with additional benefits of reducing air pollution, corresponding health costs and creating jobs, which translate to further economic gains 53 , 54 . A steady growth in capital investments in the power sector indicates that fuel imports into the country and the respective negative impacts on trade balances will fade out through the transition, giving rise to increasing energy security.

The average cost across India is an accurate representation of the cost of the power sector, as effective cooperation among the states in terms of generation, transmission and storage enables a least-cost power system for India as well as the individual states. Direct investments, power purchase agreements (PPAs) for round-the-clock supply across the different states from central and state avenues will generate income and employment for all states and also enable least cost electricity for consumers in the country.

Reduction in GHG emissions during the transition

The reduction in GHG emissions as a function of increasing shares of renewables during the transition is shown in Fig.  8 . The results indicate a rapid decline in GHG emissions in the power sector, reaching almost zero well before 2050 (2040) in comparison to current levels of about 1200 MtCO 2eq /a in 2020, on a national level. This reduction in GHG emissions is in line with the Paris Agreement target of limiting temperature rise to 1.5°C above pre-industrial levels by 2050, with zero GHG emissions across all energy sectors. As the power sector drives the transition across other energy sectors (heat, transport and industry) with increased electrification, which is a growing trend even in India, particularly with increased impetus on electric vehicles, a rapid transition will be a fundamental enabler of a climate compliant energy pathway for India.

Deep defossilisation of the power sector is possible by 2030 and a steady decline of emissions is possible beyond 2030 up to 2050.

Due to large share of coal in its electricity generation, the CO 2eq intensity of electricity generation in India is one of the highest in the world. During the transition, CO 2eq intensity rapidly declines as coal is replaced by renewables, which indicates a deep defossilisation by 2030. The level of air pollution is also expected to decline throughout India during the transition to near zero by 2040, therefore reducing associated health impacts, which has both societal as well as economic benefits.

Challenges and Uncertainties

In this research, we show a best policy scenario for the transition of the Indian power sector. Within the scope of this study, the available renewable resources in each state are adequate to satisfy the growing power demand in each state. Brown et al. 55 clearly respond to major barriers and concerns that are often associated with 100% renewables-based power systems. Nevertheless, challenges and uncertainties do exist in the modelling of future power systems.

The primary challenges are the stability of the power system with comparatively low inertia and the inability of the power system to balance short-term variability between generation and demand. However, lack of inertia from rotating masses in a 100% renewables-based power system can be mitigated by integration of synthetic inertia and improved algorithms for power inverters for generation and batteries 47 , 56 , as described by Oyewo et al. 57 for a 100% renewables-based power system for sub-Saharan Africa.

The cost developments of the different renewable energy technologies considered in the study will be uncertain due to various factors, such as the recent price hike in silicon due to COVID-19 related value chain distortions. While the costs of solar PV and batteries have fallen rapidly by almost 70–80% in the last decade, this trend is expected to continue during the transition period, based on the historic learning rates of the renewable energy technologies.

The criticality of certain raw materials like silver, copper, aluminium and lithium is seen as a potentially limiting factor in the fast growth of renewable energy and storage technologies. However, solutions do exist, and a growth in the circular economy would reduce primary production.

Social acceptance of technologies and political will are the most uncertain aspects of the transition. These aspects change overtime and are hard to integrate into techno-economic analysis. However, qualitative assessments can be made, and we assume that society and government policies will follow a low-cost, sustainable, and a climate compliant pathway.

Renewables – Key enabler of the power sector transition

In this study, a best policy scenario was devised to analyse an energy transition pathway towards integrating 100% renewable energy by 2050 for the various states in India. It is acknowledged that challenges and uncertainties do exist in such a transition.

Despite the challenges and uncertainties, the findings of this study, based on the financial and technical assumption used, show that a cost optimal rapid transition away from coal and towards 100% renewable energy based electricity generation across the different states of India can be achieved by integrating large shares of solar PV, batteries, wind energy and supported by a strong transmission and distribution infrastructure. This transition not only decreases the cost of electricity generation by phasing out fossil fuels but also enables a rapid decrease in CO 2 emissions and losses in the power sector. Future analysis could capture various uncertainties associated with such a transition pathway.

The total installed capacity of solar PV reaches 3000 GW by 2050, contributing almost 73% to the total power generation of India. On the other hand, wind plays a supporting role, which complements perfectly during the monsoon season. The contribution of wind energy to total power generation reaches 19% in 2050. Solar PV and wind energy are already low-cost in India. With the prices of batteries continuously decreasing 58 , a rapid transition of the power sector towards utilising 100% renewables is a possibility. Additionally, utilising the huge resource potential of solar and wind energy should be the preferred strategy that India should focus on. This will not only solve the increasing toxic air pollution and water stress issues 59 , but also reduce the growing fossil fuel import bill that has been over 100 bUSD for the last few years 60 . Additionally, this transition could decrease the system’s energy transformation losses to as low as 9.3% in 2050, from a high of 57% in 2020 (refer to Supplementary Information Figs.  11 and 12 ).

As the share of renewables increases across the different states, storage technologies, especially batteries and the transmission grid provide much needed flexibility during the transition, without increasing the total cost of the system. The system’s LCOE decreases from 71 €/MWh in 2020 to 38 €/MWh by 2050. The CO 2 emissions cost enables a faster transition. However, without such a cost, the LCOE still decreases by 30%, compared to the 2020 levels. Additionally, if the cost structure of 2020 is frozen to satisfy the power demand of 2050 (a non-transition scenario), this would lead to an LCOE of 268 €/MWh, which is almost six times higher than a 100% renewable energy based power system. This shows that a rapid transition of the power system across the states in India is not only based on the direct cost competitiveness of renewables but also on indirect economic benefits, such as reducing air pollution and corresponding health costs and creating additional jobs. Finally, pathways showing fully renewable power systems fulfil wide ranging environmental, socio-economic, and ethical sustainability criteria in a comprehensive manner. Therefore, fully renewable energy system scenarios should be regarded as real policy options and set as a reference for alternative pathways.

Policy implications - Opportunity for India to be a trendsetter

The growth in electricity use, among all energy carriers, is the fastest, confirming the role of electricity as the backbone of the current as well as future energy systems, globally as well as in India. This was amplified further due to the disruptions caused by the COVID-19 pandemic. Electricity as an energy vector kept societies functioning without major disruptions 61 . Also, the growing trend of ‘electrification’ of energy sectors reiterates the importance of renewable energy based electricity as an enabler of a sustainable and low-cost energy transition. This increasing trend of electrification obligates India to develop a low-cost resilient future power system, decoupling it from external price shocks of imported fossil fuels and increasing its energy security.

The power sector in India has undergone a massive transformation during the last decade. Government led reforms such as establishing a single national power grid by connecting regional grids, expanding electricity access to all households, and a massive increase in renewable energy installations have created momentum for increased electricity use and a clean energy transition 62 . A recent example can be seen from the growth in VRE installations in Karnataka. Favourable state government policies for renewable project developers, involving local farmers and reducing dependence on coal imports, resulted in a conducive atmosphere for VRE development on a large scale 63 , 64 .

India will see the largest increase in energy demand in the next couple of decades, as a result of its expanding economy, population, urbanisation and industrialisation 65 . There is huge potential for India to leapfrog polluting technologies and satisfy the growing energy demand with renewable energy and storage technologies. Doing so without increasing CO 2 emissions.

Currently, India does not directly implement a tax on carbon or GHG emissions. However, it does implement implicitly a form of taxation known as ‘fuel excise tax’. In 2021, this was 14.4 €/tCO 2 66 . However, this is lower compared to the GHG emissions cost considered in this study, which is based on a proactive climate perspective. In this context, India could consider some additional taxes on emissions or similar mechanisms to internalise the adverse effects of fossil fuels. Additionally, the revenue collected could be used towards the development of renewable energy and sustainable technologies.

Already, India has one of the most ambitious renewable energy capacity expansion targets by 2030 12 . Some of the renewable energy rich states have renewable energy penetration levels larger than some of the developed countries 17 . However, even faster growth and steeper targets will be needed in the next few decades to stop the ill effects of climate change 5 . The average annual growth rate of renewables in India has been around 15%, while solar PV installations have grown by 26% annually since 2018. However, more needs to be done in the case of India to achieve its targets of renewable capacity installation. On the other hand, globally, renewable capacity installation grew by 45% in 2020 67 . China installed 136 GW of renewables in 2020, about 50 GW of solar PV and 73 GW of wind energy. The growth of renewables in Vietnam has been phenomenal, especially solar PV, growing by almost 1000%, with 11.7 GW of solar PV installed in 2020. Similarly, Australia had an annual growth in solar PV capacity of 35% in 2020, while per capita installed capacity of renewables was more than 250 W/person/year in 2020 68 .

This study shows that a faster and a cost optimal transition is possible with solar PV, wind energy and batteries. An ambitious long term target will give a clear message to investors and stakeholders that investing in fossil fuel based electricity generating technologies will result in stranded assets.

About 137 countries have already announced their net zero targets 69 . Among top carbon emitting countries, the US and the European Union have set a target of carbon neutrality by 2050, while China has set a target of 2060 69 . India, as the third largest GHG emitter, announced their net zero emissions target by 2070 at the recently concluded COP26. The results of this study show that a rapid transition pathway for achieving net zero emissions in the power sector can accommodate India’s development imperatives of energy affordability, accessibility and mitigating air pollution in its cities, while maintaining robust economic growth.

Every country will have a different pathway towards net zero emissions, more so for India due to its uniqueness. However, one thing is clear: electricity will be the backbone of the entire energy system, with solar PV and batteries emerging as the most dominant technologies in the transition. The COVID-19 pandemic has shown us that electricity kept societies functioning when everything else stopped.

LUT energy system transition model

The LUT Energy System Transition Model is developed to assess various possible techno-economic energy transition pathways on global, national, and regional levels. The model has been previously used to study the transition of the global 46 , 47 , regional 70 , 71 , 72 and national 45 , 73 , 74 power and energy systems. The specific characteristics of individual countries or regions are captured with corresponding model input parameters and assumptions.

The primary objective of this study is to define a least-cost power system incorporating renewables for all the specified years during the transition across the different states of India, using specific initial assumptions for key technologies. The transition from the current coal dominated to a fully renewable energy-based power system by 2050 is not only cost competitive but also rapidly reduces GHG emissions. This pathway provides an alternative scenario of affordability, sustainability, and emissions reduction, mainly utilising solar, wind and batteries, further complemented by hydropower.

To evaluate an energy transition pathway from 2015 to 2050, the LUT Energy System Transition modelling tool 47 , 75 is applied to the power sector across the states of India. A hierarchical modelling approach has been applied to reduce the complexity and allow simulation at high regional resolution in India. This method is described in Bogdanov et al. 76 . The model linearly optimises a set of given constraints on an hourly resolution for an entire year (further details of the model along with the respective mathematical representation of the target functions and constraints can be found in the next section). According to Prina et al. 77 , the LUT model is one of the most sophisticated among all the investigated long term energy system models.

Two important constraints are applied to the model. First, no new power capacity installed after 2015 for coal, nuclear and conventional fossil oil-based power plants; the exception here being capacities commissioned and grid connected between 2015 and 2019, as mentioned briefly earlier. Second, in a specific year, growth in the share of installed capacity of renewable energy technologies cannot exceed more than 4% of the total installed capacity per annum from 2020 onwards. Additional information on the constraints can be found in the next section.

The model defines a cost-optimal capacity mix of generation, storage, transmission, and flexibility technologies to match the hourly power demand for each of the 22 states for a reference year. The costs of operating a power system for an entire year are calculated as a sum of the annualised capital expenditures (Capex), the Weighted Average Cost of Capital (WACC), Operational Fixed (Opex fixed) and Operational Variable (Opex var) expenditures, ramping costs for thermal generators, fuel costs and the cost of GHG emissions for all available technologies. The detailed financial and technical assumptions for all technologies are given in the Supplementary Information Table  1 − 4 .

In addition to the energy system transition modelling, the power sector incorporates distributed self-generation and consumption of residential, commercial, and industrial PV prosumers. A prosumer is an individual entity generating their own electricity by installing rooftop solar PV and optional batteries and can also consume electricity from the grid (and supply excess generated electricity to the grid if regional policy allows). These prosumers are optimised exogenously with a different model describing rooftop PV capacities and battery development 78 . The prosumer modelling determines the cost-optimal solar PV capacities installed on rooftops with the battery energy storage, individually for residential (all roofs used for residential purposes such as residential houses, apartments, individual houses, etc.), commercial (all roofs used for commercial purposes such as commercial buildings, malls and government buildings) and industrial prosumers (all rooftop available from the industrial complexes).

The hourly profiles for solar PV consumption, battery charging and discharging, electricity supply from the grid, and feed-in of excess electricity to the grid are determined through the target function of minimisation of annual electricity costs. The details of the target function used for prosumers is given in the next section. The resulting output from the prosumer model defines the demand of the centralised power system. As a result of the integration of prosumers into the larger energy system, prosumers reduce the daily peak demand and, in turn, reduce the centralised system’s power plant capacities. Integration of large scale prosumers will require bidirectional smart meters, and it is assumed to be part of the prosumer setup.

The capacity built, electricity generated, storage and grid deployed are all based on the results of the applied target function and constraints. It is acknowledged that there could be various pathways to achieve a zero GHG emission power system by 2050, such as integrating large shares of nuclear energy, carbon capture and storage and biomass. However, in this study, a least cost scenario is highlighted by utilising abundant potential of solar and wind energy 79 .

The power sector transition modelling for India is performed by using the LUT Energy System Transition Model tool 47 , 75 . Under the assumption of perfect foresight of renewable energy power generation and power demand, the power system is linearly optimised on an hourly resolution for an entire year under a set of applied constraints. The optimisation is performed using a third-party solver. In this study, MOSEK ver.8 is used as an optimiser, but other solvers (Gurobi, CPLEX, etc.) can also be used. The model is compiled in the Matlab environment in LP file format so that the model can be read by most of the available solvers. After simulation, the results are parsed back into the Matlab data structure and post-processed.

A multi-node approach used in this study enables the description of any desired configuration of states and power transmission interconnections. To decrease the simulation time, a hierarchical modelling approach has been applied 76 . The modelling is performed in two steps. First, modelling of the system in a reduced regional resolution (4 regional grids). Second, modelling of each of the regional grids in full state resolution, considering the power flows between the regional grids simulated in the first step. The results represent the operations of the integrated power system in full resolution, where power can flow between all the states. Figure  9 describes the detailed regional configuration.

India has five regional grids. In this analysis, we have combined the Eastern and Northeastern grids to form an Eastern grid, so we have four regional grids. All the major states are considered as shown, while smaller states and union territories are combined to the nearest state, except Delhi. The individual states within each of the regional grids are interconnected, and the regional grids are interconnected with each other. These transmission lines enable imports and exports between the states. It is assumed that the existing network of alternating current (AC) lines within the individual states will provide electricity to all end consumers.

The main constraints for the optimisation are the matching of all types of generation and power demand for every hour of the applied year, and the optimisation criteria is to have a least annual cost of the power system. The hourly resolution of the model significantly increases the computation time; however, it guarantees that for every hour of the year, the total supply within a region covers the local demand and enables a more precise system description, including synergy effects of different system components.

Target function

The target of the system optimisation is to minimise the total annual cost of an integrated power system, calculated as the sum of the annual costs of installed capacities of different technologies, the costs of power generation and ramping technologies. This target function includes the annual costs of the power sector. The target function of the applied energy model for minimising annual costs is presented in Eq. ( 1 ) using the abbreviations: states/regions ( r , reg), generation, storage and transmission technologies ( t , tech), capital expenditures for technology t in region r (CAPEX r,t ), capital recovery factor for technology t in region r (crf r,t ), fixed operational expenditures for technology t in region r (OPEXfix r,t ), variable operational expenditures technology t in region r (OPEXvar r,t ), installed capacity in the region r of technology t (instCap r,t ), annual generation by technology t in region r (E gen ,t,r ), cost of ramping of technology t (rampCost t ) and sum of power ramping values during the year for the technology t in the region r (totRamp r,t ).

The target function only considers the cost assumptions for the given step of transition as the previously built capacity is defined as a lower limit for the total capacity (instCap t,r ), and thus the previously built capacity costs do not affect the optimisation.

The rooftop prosumer system (solar PV and batteries) is realised in an independent sub model with a slightly different target function. The prosumer system is optimised for each region and each power demand segment (residential, commercial and industrial) independently, even if the states or regions are interconnected with each other. The target function includes annual costs of the prosumers power generation and storage and the cost of electricity bought from the distribution grid. The cost of electricity sold to the distribution grid is deducted from the total annual cost. The target function of the applied prosumer model for minimising annual costs is presented in Eq. ( 2 ) using the abbreviations: generation and storage technologies ( t, tech ), capital expenditures for technology t (CAPEX t ), capital recovery factor for technology t (crf t ), fixed operational expenditures for technology t (OPEXfix t ), variable operational expenditures for technology t (OPEXvar t ), installed capacity of technology t (instCap t ), annual generation by technology t ( E gen ,t ), retail price of electricity (elCost), feed-in price of electricity (elFeedIn), annual amount of electricity bought from the grid ( E grid ), annual amount of electricity sold from the grid ( E curt ).

Energy balance constraints

The main constraint for optimising the power sector is matching power generation and demand for every hour of the applied year. For every hour of the year, the total generation within a region and electricity imported should cover the local electricity demand.

Equation ( 3 ) describes constraints for the energy flows of a region. Abbreviations: hours ( h ), technology ( t ), all modelled power generation technologies (tech), sub-region ( r ), all sub-regions (reg), electricity generation ( E gen ), electricity import ( E imp ), storage technologies (stor), electricity from discharging storage ( E stor,disch ), electricity demand ( E demand ), electricity exported ( E exp ), electricity for charging storage ( E stor,ch ), curtailed excess energy ( E curt ). The energy loss in the high voltage direct current (HVDC) and alternating current (HVAC) transmission grids and energy storage technologies are considered in storage discharge and grid import value calculations.

Apart from this, various financial and technical assumptions that are utilised for the cost optimisation of the model are presented in the Supplementary Information Table  1 − 4 .

The important constraints applied in the modelling are given below:

No new power capacity will be installed after 2015 for coal, nuclear and conventional fossil oil-based power plants, mainly due to their inability to fulfill the high sustainability criteria set in the model. The capacities commissioned and grid connected between 2015 and 2019 are an exception. It is assumed that coal and oil-fired power plants under construction and planned capacities are scrapped and not commissioned. All fossil fuel-based power plant capacities are fully amortised until the end of their technical lifetimes to facilitate a gradual phase out. Their utilisation is cost optimised so that, in later periods for some states, full load hours or capacity factors even decline to zero, due to their higher per unit cost of electricity production. Even though these capacities do not produce electricity, they have to be amortised for political reasons, a procedure which is known as cold reserve (also called security reserve). Gas turbines and multi-fuel ICE are permitted to be installed beyond 2015 due to lower carbon emissions and the possibility to accommodate renewable electricity based methane (e-methane), bio-methane and even green hydrogen into the system. Gas-fired power plants are more flexible, not only in their ramping rates but also in utilising different e-fuels

In a specific year, growth in the shares of installed capacities of renewable energy technologies cannot exceed more than 4% per annum from 2020 onwards in congruence with empirical data 80

The active capacity existing in the system is defined on each of the steps for each of the regions, based on the data of the capacity installed at previous steps and the lifetime for a given technology at given commissioning year as presented in Eq. ( 4 ) using the abbreviations: years ( y, year ), generation and storage technologies ( t, tech ), existing active capacity for technology t at modelled year (existingCap t,year ), new built capacity for technology t at previous year y (newCap t,y ), lifetime of the capacity of technology t built in year y (N t,y ):

Then the model optimisation results in the optimal regional capacity of the technologies in the given year, which defines the new built capacity needed by the system as defined in Eq. ( 5 ) using the abbreviations: modelling year ( year ), generation and storage technologies ( t, tech ), new built capacity for technology t at a given year year (newCap t,year ), total capacity for technology t at a given year year as defined by the model optimisation ( \({instCap}\) t,year ), existing active capacity for technology t at modelled year (existingCa p t,year ):

The energy cost calculations in the post-processing phase are based in a hierarchical approach, where the annualised cost of the system considers the financial assumptions in the periods when these capacities were built, unlike the approach used in the optimisation and described in Eq. ( 1 ). For the variable opex calculations, the energy output of technologies is split accordingly to the capacity age structure as defined in Eq. ( 6 ) using the abbreviations: modelling year ( year ), all years from 1960 ( y ), generation and storage technologies ( t, tech ), annual generation by technology t by capacity built at year y ( E genSplit ,t,y ), new built capacity for technology t built at year y (newCap t,y ), annual generation by technology t defined by the model for the modelling year year ( E gen, t,year ), total capacity for technology t at given a year year as defined by the model optimisation (instCap t ,year ) lifetime of the capacity of technology t built at year y ( N t,y ):

The annnualised cost of the system at a given year is calculated accordingly to the Eq. ( 7 ) using the abbreviations: modelling year ( year ), all years from 1960 ( y ), generation and storage technologies ( t, tech ), capital expenditures for technology t in region r and year y (CAPEX r,t,y ), capital recovery factor for technology t in region r and year y (crf r,t,y ), fixed operational expenditures for technology t in region r and year y (OPEXfix r,t,y ), variable operational expenditures technology t in region r and year y (OPEXvar r,t,y ), new built capacity for technology t built in region r at year y (newCap r,t,y ), lifetime of the capacity of technology t built at year y ( N t,y ), annual generation by technology t in region r in year year by capacity built at year y ( E genSplit ,r,t,y ), cost of ramping of technology t (rampCost t ) and sum of power ramping values during the year for the technology t in the region r (totRamp r,t ):

This historical cost calculation approach is used for other cost calculations including LCOE and split of LCOE in sub-categories.

The schematic of the LUT Energy System Transition Model with the various inputs, optimisation and results is illustrated in Fig.  10 .

The model consists of various primary data as an input to the optimisation process, where, first, the prosumer target function is optimised, and in the second step, the system target function. Different optimised results are obtained as an output.

Development of electricity demand

The average per capita electricity demand is assumed to rise from 1.2 MWh in 2020 to 3.5 MWh in 2050, while the population is projected to increase to 1.7 billion by 2050, as highlighted in the Supplementary Information Fig.  1 . Total electricity demand of the Indian power sector is estimated to increase to about 5921 TWh by 2050, which represents a compound average annual growth rate of around 4.9% in the energy transition period, in line with the expectations of the government and other energy institutions 81 . Use of electricity in other energy sectors (such as heat, transport and industry) is not considered in this research, which could lead to an additional increase in electricity demand during the transition period. The synthetic electricity demand profiles from 2015 until 2050 are generated for each of the states, based on the methods applied by Toktarova et al. 82 . Load profile will be different for the centralised power system due to partial load covering by prosumers. The seasonal and daily variations are captured in the load profiles up to 2050 across all the 22 states in the country.

Electricity generation technologies and other resources

The model is integrated with all crucial aspects of power systems: generation, storage and transmission 83 .

Technologies for electricity generation : Solar PV fixed tilted, solar PV single-axis north-south tracking, solar PV rooftop, concentrating solar thermal power (CSP), wind onshore and offshore, hydropower run-of-river, hydropower reservoirs, geothermal, bioenergy (solid biomass, biogas, and waste-to-energy). The existing fossil fuels-based generation technologies considered are coal and conventional oil based power plants, open cycle gas turbines (OCGT), combined cycle gas turbines (CCGT) and nuclear technologies. In addition, new technologies like multi-fuel reciprocating ICE (gas) and heavy-duty open cycle gas turbines (OCGT HD) make up the electricity generation technologies.

Energy storage technologies : Lithium-ion (Li-ion) batteries and pumped hydro energy storage (PHES) for short-term storage. Adiabatic compressed air energy storage (A-CAES) and thermal energy storage (TES) for medium-term storage. Gas storage including power-to-gas technology, which allows production of e-methane for the energy system for seasonal storage requirement.

Electricity transmission technologies : The existing power grid, its future development, and impact on overall electricity transmission and distribution losses 84 is taken into account in the transition. The states are interconnected with high voltage direct current (HVDC) or high voltage alternating current (HVAC) power lines. These transmission lines provide the required flexibility by spatial distribution of renewable-based electricity, especially in the monsoon season 48 , while reducing overall national system costs.

Best Policy Scenario

The LUT Power System Transition Model can be utilised to generate wide-ranging power sector scenarios across the different regions of the world on a global-local scale. However, the objective of this study is to highlight a power sector scenario for the states in India interconnected via transmission lines in the context of achieving the goals of the Paris Agreement by reaching zero GHG emissions from the power sector in a technically feasible and economically viable manner. Therefore, a Best Policy Scenario is envisioned for the power sector from 2015 towards a cost-optimal power system by 2050. The results are visualised and presented in 5-year intervals through the transition from 2015-2050 for the power system transition across the states of India.

Technical and financial assumptions

The key technical and financial assumptions, with the corresponding references, are presented in Table  1 . A comprehensive list of all the assumptions used in this study is presented in Supplementary Information Table  1 − 4 . The key assumptions are mostly taken from the Central Electricity Authority (CEA), and the Central Electricity Regulatory Commission (CERC). Table  2  presents the ramping costs for key power generation technologies. However, not all assumptions were available from these sources, therefore global assumptions were used in such cases. Each of these technical and financial assumptions are considered for 5-year time periods between 2015 to 2050. The average solar PV costs in India, in 2020 was 455 USD/kW i.e. ~424 €/kW 85 . The average lifetime is given in the range of 25-40 years in the NREL study 86 . Warranties are often used as an indicator of the economic lifetime of solar PV modules which is 25 years, while the modules can produce more than 80% of the original power after 25 years and upto 50 years 87 . Based on various project developers, and other stakeholders the useful life assumptions increased from an average of ~21.5 years in 2007 to ~32.5 years in 2019 86 . Currently, the assumptions range from 25 years to more than 35 years 86 . Increase in lifetime is expected as we go through the transition towards 2050, as observed from 2007 to 2019. For residential batteries, average cost of battery packs in India is 215 €/kWh 88 . The weighted average cost of capital (WACC) was set to 11% in 2015, declining steadily to 7% in 2050 (Table  3 ). However, in the case of residential solar PV prosumers, WACC is set to 4% due to lower financial return expectations. Electricity prices for residential, commercial and industrial consumers were taken from the Tariff Order for individual states, and extended to 2050 based on the methods of Breyer and Gerlach 89 . The excess electricity generated by PV prosumers is fed into the national grid and is assumed to be incentivised for a transfer price of 0.02 €/kWh. The model ensures that prosumers satisfy their own demand for electricity before feeding it to the grid. The costs for biomass are calculated using data from the IEA 90 and IPCC 91 . Solid wastes gate fees are 50 €/ton in 2015, 53 €/ton in 2020, 59 €/ton in 2025, 68 €/ton in 2030, 80 €/ton in 2035, 95 €/ton in 2040, 100 €/ton in 2045 and 2050; the assumption is based that gate fees will gradually increase globally and by 2050 reach 100 €/ton as in most of the developed countries. It is assumed that the GHG emissions cost increases from 28 €/tCO 2 in 2020 to 150 €/tCO 2 in 2050 92 .

Capacity factor profiles

The hourly feed-in profiles for solar PV, wind energy and hydropower were provided as an input to the model. The dataset used for solar irradiation and wind speed is in a 0.45° X 0.45° spatial resolution for the real weather conditions. The feed-in full load hours (FLH)/capacity factors for the individual states are computed on the basis of the 0.45° X 0.45° spatially resolved single sub-area data using a weighted average formula. The individual state capacity factors are calculated using the following rule: 0–10% best sub-areas of a state are weighted by 0.3, 10–20% best sub-areas of a state are weighted by 0.3, 20– 30% best state of a region are weighted by 0.2, 30–40% best sub-areas of a state are weighted by 0.1 and 40–50% best sub-areas of a state are weighted by 0.1. The FLH/capacity factor of solar PV and wind energy estimated at a high geospatial resolution across the country are given below in Supplementary Figs. 2 and 3 .

Renewable energy potentials

The potential capacities, or the upper limits for solar PV and wind energy, are based on land use limitations and specific capacity densities. The area covered by solar PV plants is set at a maximum of 6% of the total land area available in each of the states. The average specific capacity density of solar PV is assumed to be 75 MW/km 2 for the entire transition period. This is based on 15% module efficiency and a 50% ground coverage ratio 93 , and is confirmed by empiric data 94 . However, increase in the efficiency of the PV modules that would impact the specific capacity density is not considered. The total calculated installable potential for utility-scale solar PV in India is 14223 GW.

For onshore wind power plants, land use limitation is set to a maximum of 4%, while the average specific capacity density is assumed to be 8.4 MW/km 2, 93 . The total calculated installable potential for onshore wind energy is 1062 GW.

For hydropower plants and pumped hydro energy storage (PHES), the potential was set to 150% and 200% of the already installed capacities of 2015. The geothermal energy potential was calculated according to the methods described in Aghahosseini and Breyer 95 . The biomass potentials were calculated based on the methodology described in Mensah et al. 96 .

Data availability

The data and the main model code that support the findings of this study is available from the authors on reasonable request.

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Ashish Gulagi, Manish Ram, Dmitrii Bogdanov, Theophilus Nii Odai Mensah & Christian Breyer

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A.G. was responsible for data collection, methodology, simulation, results analysis, and writing, reviewing and editing original draft. M.R. was responsible for methodology, result analysis and reviewing and editing original draft. D.B. was responsible for model development, reviewing and editing original draft. S.S. contributed to methodology and reviewing and editing original draft. T.N.O.M. provided the biomass potential data. C.B. analysed the results, supervised, contributed to reviewing and editing original draft and coordinated the work.

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Gulagi, A., Ram, M., Bogdanov, D. et al. The role of renewables for rapid transitioning of the power sector across states in India. Nat Commun 13 , 5499 (2022). https://doi.org/10.1038/s41467-022-33048-8

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Renewables Integration in India

About this report, executive summary, india’s demand for energy is growing rapidly.

India is the third largest energy-consuming country in the world. It has become one of the largest sources of energy demand growth globally and has made significant progress towards its universal electrification target for residential users, with 100 million people gaining access in 2018 alone. Per capita electricity consumption across the 28 Indian states and eight union territories is still around a third of the world average, and is expected to continue increasing despite the government’s intention to pursue strong energy efficiency standards, including LED lighting, efficient cooling and building standards. Total Indian electricity demand has begun to expand again following a significant decline in 2020 due to Covid-19. The pandemic has affected the financial viability of the electricity distribution companies (DISCOMs), which were already struggling with mounting debts and a liquidity crunch.

India faces three principal challenges: (1) how to expand reliable energy access and use while maintaining affordability for consumers and financial stability for the DISCOMs; (2) how, at the same time, to integrate increasing shares of renewable energy in a secure and reliable manner; and (3) how to reduce emissions to achieve ambitious social and climate objectives while meeting economic goals.

Growing renewables increasingly challenge the power system

Renewable energy penetration is highly variable by state in India. The share of solar and wind in India’s ten renewables-rich states (Tamil Nadu, Karnataka, Gujarat, Rajasthan, Andhra Pradesh, Maharashtra, Madhya Pradesh, Telangana, Punjab and Kerala) is significantly higher than the national average of 8.2%. Solar and wind account for around 29% of annual electricity generation in Karnataka, 20% in Rajasthan, 18% in Tamil Nadu and 14% in Gujarat (financial year [FY] 2020/21). India’s renewables-rich states already have a higher share of variable renewable energy (VRE) than most countries internationally. As a result, many states are already facing system integration challenges.

Countries and regions in phases of renewables integration, 2019

Furthermore, in the coming decade the Indian power system is due to undergo an even more profound transformation. The government plans to increase renewable generating capacity from 175 GW in 2022 to 450 GW in 2030. Some state leaders have expressed concern that they will face excess VRE generation and the need to: (1) export significantly more power to other states; (2) allow renewables to displace some coal power plants locally; or (3) curtail more solar and wind to ensure system security. Recent trends underlying the main renewables integration challenges include the increasing variability of hourly demand, increasing ramping requirements due to the impact of solar on net demand, short-term frequency variations and local voltage issues.

While the Power System Operation Corporation (POSOCO), a wholly owned public sector undertaking under the Ministry of Power, highlighted that national-level inertia has declined slightly from the 2014 level at certain times, India does not yet face system inertia challenges. However, with future increases in solar and wind power, the renewables-rich states will experience periods when wind and solar make up the majority of generation, and it will then become imperative to monitor local system strength and inertia requirements. The report covers important international experience in managing systems with declining inertia levels.

Indian states should leverage all potential sources of power system flexibility to maximise the value of solar and wind

This report highlights potential sources of power system flexibility in renewables-rich Indian states, including demand-side flexibility, power plant flexibility, storage (pumped-storage hydro and batteries) and grid flexibility, as well as policy, market and regulatory solutions that can be implemented in the short to medium term until 2030. The optimal mix of flexibility resources needs to be determined for each state, taking into account the regional and national context. For example, there are trade-offs between investing in batteries, pumped-storage hydro, demand response and coal power plants that depend upon the existing generation and demand profiles of each system. This report fills a gap in the international literature by focusing on renewables integration in individual states, rather than at the national level in India. It builds on the ongoing power sector stakeholder engagement that the IEA and NITI Aayog have been leading since 2018, including the outcomes of a series of workshops in recent years – one national, four regional and three state level – and the related in-depth analysis. The report also draws on two detailed production cost models developed by the IEA to illustrate flexibility challenges and solutions: a five‑region India Regional Power System Model and a Gujarat State Power System Model. Power system flexibility challenges, solutions and priorities are very different in each state. This report highlights the findings applicable to multiple states in India, and potentially across the globe.

Policy and tariff reforms can tap into demand response potential

Power system transformation in India will be supported by the transformation of electricity demand from passive consumption to more proactive participation by demand sectors. Agricultural users already play an important role in balancing power supply and demand through involuntary irrigation load shifting, and the IEA analysis foresees more active participation from the agricultural sector, buildings (including cooling) and industry by 2030.

The existing agricultural demand shift from high to low demand hours already provides a significant source of low-cost power system flexibility in India, and has assisted some states in reaching high levels of solar and wind penetration without major system events. This shift has been largely enabled by the availability and use of existing distribution networks dedicated to agricultural users in certain states, which allow the system operator to control irrigation loads without impacting other grid users. Looking ahead, transitioning from involuntary agricultural demand shift to proactive agricultural demand response (e.g. active response to a price signal) can be one of the most cost-effective solutions to improve power system flexibility, although its use must be balanced against the potential impact on the water stress of each region. 

Solar generation absorption with limited flexibility, projections for 2030

Solar generation absorption with agricultural demand shift, projections for 2030.

Time-of-day (or time-of-use) tariffs for industry are offered in most states as the basis of the existing industrial demand response incentive. In the medium to longer term, a shift towards time-of-use tariffs as the default option is recommended, following the rollout of advanced metering infrastructure, for the activation of demand response potential from buildings and transport (such as cooling and electric vehicle [EV] smart charging). On the residential side, shifting towards advanced digital metering, automation and smart home appliances is a prerequisite, whilst ensuring cybersecurity and avoiding proprietary standards that could limit interoperability and consumer choice.

Rooftop solar systems need to be monitored and managed

State system operators and DISCOMs are concerned about the rise of rooftop solar systems, due to their impact on DISCOM financial stability (from revenue loss), distribution system issues (from reactive power, voltage impacts and reverse power flows) and demand forecast uncertainty. This report highlights international experiences, illustrating how these can become system-friendly assets and support the low-voltage network with voltage stability and reactive power. To improve the visibility of rooftop solar assets in India, connection codes need to stipulate the registration of individual systems, with state- and national-level registers of these assets. The rooftop solar database should first be built in states. Later, a national-level standardised interface and data model can bring more efficiency and transparency. Requiring all rooftop solar customers to be on time-of-use tariffs can help mitigate the revenue loss suffered by DISCOMs while also balancing the shift in costs between consumers with rooftop solar and consumers without it. Regularly revisiting time-of-use timeslots will be required as rooftop solar additions and demand response reshape the state demand curves. 

New regulatory and policy frameworks can activate more flexibility from storage and power plants

Most states are concerned about the future role of existing coal-fired power plants. Coal plants are expected to operate less as renewable technologies supply more generation, which leads to reduced revenues. At the same time, to operate flexibly and meet stricter emissions standards, some coal plants may also require further investment. Such investment needs to be weighed against investment in flexibility sources in other parts of the system (storage, demand and grids) and emission reduction targets. Government officials are also concerned that historical dependence on long-term power procurement contracts as the tool for ensuring capacity adequacy creates an economic burden by locking in long-term fixed capacity payments to coal power plants.

In the Stated Policies Scenario (STEPS) of the IEA World Energy Outlook (WEO), coal capacity in the Indian power system will increase to 269 GW by 2030 compared to 235 GW in 2019. The analytical results of the IEA India Regional Power System Model show that the use of coal power plants in India will change dramatically by 2030. Use will shift from typically steady baseload operation to frequent operation near minimum and maximum output levels. Coal plants in some states have the potential to better support the integration of high shares of VRE with increased flexibility, such as faster ramp rates, lower technical minimum levels and shorter start-up times. Additional flexibility, however, requires new investment and new compensation designs for these power plants. In contrast to the current tariff structures focused on capacity and energy payments, emphasis should be placed on tariff and market-based compensation for flexibility.

Retrofitting hydropower plants to allow operation in pumped-storage mode seems to be the preferred storage solution in many states in India. However, batteries are also likely to play an important role in India. Analysis by the Lawrence Berkeley National Laboratory suggests that battery storage coupled with solar farms can be a more cost-effective solution than pumped-storage hydro retrofits for morning peaks or evening ramps requiring a storage duration of less than six hours. The optimal sizing and location of battery storage will differ by region and requires detailed studies in each state. 

Changes to wholesale markets and power purchase agreements can remove barriers to interstate trade

The current regulatory and market frameworks present significant gaps and barriers for power system flexibility resources, including demand response, batteries, pumped-storage hydro and power plant flexibility. Comprehensively reviewing and removing the wholesale and retail market barriers to new technologies and creating an equal playing field for all resources is an important ongoing task not only in India, but worldwide.

India’s wholesale power trade achieved important milestones in 2020, with improved trading across Indian states and the introduction of real-time markets and green markets. Since 2020 the real-time market has filled an important gap by providing corrections on an hour ahead timeframe for variable and uncertain generation such as solar and wind. The newly established green market enables clients such as the DISCOMs to fulfil the states’ renewable purchase obligations through market purchases.

Analysis based on the IEA India Regional Power System Model suggests that additional power trading across states is an effective renewables integration solution that could reduce curtailment by around 2.5% in the STEPS in 2030. However, significant barriers remain to reach this potential. These include: (1) the lack of transmission capacity available for interstate trade; (2) the low level of liquidity in wholesale markets; and (3) the inflexible existing contractual structures, namely long-term physical purchase power agreements (PPAs) between the DISCOMs and generators (also contributing to the low liquidity).

States will need to weigh the costs and benefits of potential new transmission investment against the costs and benefits of other flexibility options. In India existing long-term physical PPAs represent about 90‑95% of total generation. The current practice of using these PPAs to meet resource adequacy requirements may not be the most cost-effective tool for achieving resource adequacy. Existing PPAs also pose a barrier to improved power system flexibility from both interstate trade and power plant flexibility. Thus, states could consider creating alternative resource adequacy mechanisms and using financial PPAs. In the longer term, a sophisticated financial market for power sector products could be introduced in India.

Flexibility reduces curtailment, and lower curtailment means reduced system operating costs and lower CO2 emissions

Reduction in curtailment, co2 emissions and operating costs due to combined flexibility options in india and gujarat.

Some level of curtailment is present in most systems with high solar and wind penetration – typically up to 3% of annual solar and wind output.

While renewables have must-run status in India, renewable generators can be curtailed due to system security considerations. For example, states such as Tamil Nadu and Karnataka have seen solar and wind curtailment in recent years.

Increasing solar and wind generation curtailment and lack of related mitigation policies are a major concern, particularly for investors. Power sector investment in India fell by USD 10 billion to USD 39 billion in 2020, including a decline in solar and wind investment, mainly due to the impacts of Covid-19. Improving investor confidence will be important in the coming years as India aspires to attract greater power system investment. To better address curtailment risk, discussions on the future of the must-run status of solar and wind must continue. Formulating practical contractual structures and policies related to compensation for curtailment will be critical.

Increasing power system flexibility enables the integration of higher shares of solar and wind generation. As a result, for a given amount of solar and wind capacity, a larger share of renewables can be utilised. This is illustrated in the two models presented in this report. Lower curtailment also brings about the benefits of reduced system operating costs and lower CO 2 emissions.

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IEA (2021), Renewables Integration in India , IEA, Paris https://www.iea.org/reports/renewables-integration-in-india, Licence: CC BY 4.0

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