India is in a position to install over 10GW of renewables annually from 2017, as large-scale renewables, rooftop solar and off-grid sectors show significant growth.
This is according to a new report released by Bloomberg New Energy Finance (BNEF) this week, Financing India’s Clean Energy Transition.
India ranks high for renewables
According to a BNEF statement: “The South Asian country now has the third biggest power sector in the world after China and the US. As economic growth continues and population rises, it faces the triple challenge of meeting growing demand, cutting pollution and offering modern energy to more than 300m people not connected to the power grid.”
According to the report, total annual investments in utility-scale projects crossed the $10 billion mark last year.
“The Indian government’s ‘175GW renewables by 2022′ target includes 135GW of utility-scale projects. This implies that cumulative capacity would have to increase more than three times between 2016 and 2022, from 39GW in 2015 to 135GW, requiring investment of nearly $100 billion (an average $14 billion/year),” BNEF said.
They added: “The Indian project developers are trying to meet this capital requirement through various means, including increasing borrowings from multilateral organisations and issuing green/masala bonds.
“While Securities and Exchange Board of India is still finalising the modalities for the formation of quoted infrastructure investment trusts (similar to US yieldcos), Indian renewable energy developers are already planning to list assets adding up to $1.3 billion under this mechanism.”
Ashish Sethia, head of APAC power and gas markets at Bloomberg New Energy Finance, said: “Reaching $10 billion yearly investment was a significant event, and so was the issuance of the first green bonds. The next one to watch out for on India’s clean energy journey would be the listing of infrastructure investment trusts.”
Rooftop solar PV projects
The report findings indicated that “the small and rooftop solar sector will need another $50 billion to meet its own ’40GW by 2022 target’. Rooftop solar in particular has become the fastest growing renewable power sub-segment in India’s clean energy market.
“Starting from a small base, annual installations have increased by nearly three times (from 72MW to 227MW) in the past three financial years and this trend is expected to continue.”
The report highlights the declining cost of rooftop pv, which now sits between $69 and $92 per MWh.
Shantanu Jaiswal, lead India analyst at Bloomberg New Energy Finance, said that rooftop solar power costs are “now competitive with tariffs paid by industrial and commercial consumers and often comparable to average residential electricity rates”.
BNEF noted that the main challenges in scaling up small and rooftop solar installations are awareness about achieving immediate economic benefits and access to loans without collateral.
Jaiswal said: “Prime Minister Narendra Modi has a vision to provide 24×7 electricity to every person in India and one way to achieve 100% electrification is to make use of off-grid power.
“This is not only quicker than building a conventional grid through remote and sparsely populated areas but also defers the investments needed to build transmission infrastructure.”
According to BNEF, Solar lanterns and home systems are often the first step on the energy ladder for people not connected to the grid.
“The report found that the annual sales of such devices has increased by an average of 47% per year, and this helped to provide electricity to 91,000 households during the financial years 2013 to 2016 (April 2012 to March 2016).
“Subsequent increases in power demand in off-grid areas can be met by small renewable grids. These started to provide 76,000 rural households with scheduled power in FY2013-16.”