India is on a mission to amplify its renewable energy capacity to a massive 175 GW by 2022. The earmarked capacities include 100 GW from solar, 60 GW from wind, 10 GW from bio-power, and 5 GW from small hydro-power. However, the road to accomplishing this substantial target presents several hindrances, such as lack of viable tariffs, slow capacity addition, and sector-specific challenges.
Current State of Renewable Energy in India
Unfortunately, the current rate of wind and solar power capacity additions is falling short of achieving the set objectives. Notably, the government exhibits a reduced interest in advancing the solar heating segment and offshore wind sector. Furthermore, there’s a lack of focus on emerging areas like ocean and geothermal energy. Biomass and small hydro sectors are at a standstill, demonstrating no signs of progress.
Daunting Challenges of India’s Renewable Energy Sector
The Indian government’s over-emphasis on retaining low tariffs poses a significant challenge. Recent bids have seen wind and solar tariffs plummet to ₹2.44 per kWh. Several industry observers deem this rate unviable, suggesting that it was quoted by bidders in haste to lock down projects. Moreover, certain bids have been scrapped because the government decreased tariffs even further than quoted.
Another issue hindering India’s renewable energy growth is the sluggish pace of capacity addition. As a result of efforts from the Ministry of New and Renewable Energy (MNRE) to lower tariffs of wind and solar power, capacity addition has taken a hit. Since 2014, the country has only managed to add 28,000 MW of solar power and 14,500 MW of wind power.
Apart from the above, each sector within the renewable energy space grapples with its own set of hurdles. Solar energy producers constantly wrestle with uncertainties surrounding safeguard duties, GST rates, and a declining rupee. On the other hand, wind energy installations have been hampered due to land disputes in Gujarat.
On a broader level, industries in this field contend with rampant corruption and steep prices while securing rights-of-way across all states. Complicating matters further, state government-owned utilities are delaying their dues payments to the energy companies.
Indian Renewable Energy Sector: A Quick Snapshot
| Type of Energy | Current Capacity |
|---|---|
| Solar Power | 30,600 MW |
| Wind Power | 35,600 MW |
| Bio-Power | To Be Determined |
| Small Hydro-Power | To Be Determined |
Suggested Measures to Overcome Challenges
To decongest windiest sites like those in Gujarat, it’s recommended that the government introduce state-wise or sub-station-wise tenders, ensuring a more equitable distribution of projects. Instead of the current auction model where bidders attempt to outdo each other, a closed tender system could be implemented. In this system, the project goes to the bidder offering the most competitive price.
Another viable step involves the government fixing a tariff rate which would decrease year on year. This would enable energy companies to accrue higher profits during the initial years and pay off their debts accordingly. Lastly, there is a need for the Indian government to tap into ocean energy, derived from waves, tides, and currents. This source of energy, providing steady 24×7 power, remains largely unexplored and holds significant potential.
