India on track to exceed its renewable energy target by 2027, says IEEFA. Know how

India introduced 5.8GW of new coal-fired capacity but shuttered 2.4GW of end-of-life thermal power plants in FY19, resulting in net new adds of just 3.4GW

New Delhi: Given the existing trajectory of wind and solar as well as other renewable sources of biomass and run-of-river (RoR), India looks set to reach 144 GW renewable energy capacity by FY2021/22, not far from the aspirational 175GW target set back in 2015, a report by Institute for Energy Economics and Financial Analysis (IEEFA) said. This places India on track for a run-rate that will exceed its 275GW target in 2027.

Renewable energy installs dropped in FY19

However, IEEFA pointed out that new on-grid capacity additions in renewable energy stood at 8.6GW (6.5GW of solar, 1.6GW of wind and 0.5GW from other sources) for the financial year ending in March 2019 — registering a 40 percent drop from the peak renewable energy installs achieved in 2016-17.

IEEFA's report underscored policy uncertainties as well as a lack of grid infrastructure as some of the key reasons for below-expected renewable capacity installations in FY2018-19.

Despite the evident chaos in incomplete installations, India exited the year with 22.5GW of renewable capacity auctions awarded but yet to be built, and another 37GW under various stages of tendering and bidding, it said.

What about thermal power plants?

According to IEEFA, the last financial year turned out to be a sluggish year for both the thermal as well as renewable sectors in India in terms of increased generation capacity. In total, only 12GW of net new power generation capacity was added; compared to an average of 22GW added between FY2012/13 and FY2016/17 and 17GW in FY2017/18.

India introduced 5.8GW of new coal-fired capacity but shuttered 2.4GW of end-of-life thermal power plants during the year, resulting in net new thermal capacity adds of just 3.4GW. This is the lowest level of thermal coal power plant net adds in a decade.

How do experts explain the decline in coal-fired power plants?

"India's coal-fired capacity expansion has already declined to just 3-4GW of annual net additions, down 80% on installation activity from just three years ago. Ongoing reliance on domestic coal-fired power is a 'necessary evil' over the medium term to keep the lights on in a giant economy that is targeting sustained 7-8% annual GDP growth and further electrification," said Tim Buckley, co-author of the briefing note and IEEFA's director of energy finance studies.

According to co-author and IEEFA research associate Kashish Shah, "The continued decline in thermal capacity additions was foreseeable given the ongoing financial distress of the thermal power sector and the loss of competitiveness compared with domestic renewable energy. Against this, the slowdown in renewable capacity additions at half the government's targeted run-rate contradicts expectations."

What about wind and solar power?

IEEFA expects another near flat year for utility-scale solar with 7-8GW commissioned by March 2020, owing to import restrictions on solar modules for two years (imposed in July 2018). In spite of this, 9GW of rooftop solar could be installed in the coming three years given the 68% growth rate in annual installs during the calendar year 2018.

Wind power will most likely bounce back with potentially 5GW of new capacity under construction right now with a commissioning deadline in FY2019/20, IEEFA said.

"There are challenges which could hinder acceleration of renewable energy capacity. The government of India must anticipate these challenges and plan to mitigate the risks as soon as possible," Shah added.