India’s Thermal and Renewable Power Capacity Growth

India’s energy landscape is evolving rapidly. The country is poised to increase its thermal power capacity while boosting renewable energy sources. This dual approach aims to meet a growing power demand projected at 5.5-6% annually. The focus remains on balancing traditional coal-based generation with cleaner energy alternatives.

Current Thermal Power Capacity

India currently has around 211 gigawatts (GW) of coal-based power capacity. By March 2026, an additional 18 GW of coal capacity is expected to be added. This growth puts stress on the ongoing reliance on thermal power amidst increasing energy needs. The healthy plant load factor for thermal power plants is projected at about 70% for FY25 and FY26.

Renewable Energy Expansion

The renewable energy sector is set for growth. An estimated 30 GW of renewable capacity will be added over the next two years. This increase is supported by factors such as reduced equipment costs, policy backing, and liquidity in the market. The domestic module manufacturing capacity is also projected to rise from 67 GW to over 115 GW.

Market Dynamics and Pricing

Merchant market prices for electricity are expected to stabilise between ₹4.5-5 per unit in FY25-FY26. This stability is attributed to improved power supply conditions resulting from new capacity additions. The weighted exchange tariffs have shown a slight decline, influenced by weather patterns and enhanced supply.

Government Initiatives and Support

The Government of India is implementing several schemes to boost renewable energy production. This includes the CPSU scheme, PM Kusum Scheme, and solar rooftop initiatives. These programmes aim to increase domestic content requirements for renewable projects and enhance the manufacturing base for solar cells and modules.

Challenges in Renewable Transition

Despite the optimistic outlook, challenges remain. The energy transition relies heavily on the development of hybrid and energy storage capabilities. Additionally, the high costs of domestic production and customs duties on imports may exert pricing pressures on developers.

Nuclear and Hydro Capacity Additions

Alongside renewable energy, India plans to add around 4 GW each of nuclear and hydro capacity over the next three years. These projects face execution risks due to their long gestation periods and complex technological requirements. However, government support is anticipated to ensure the viability of these strategic projects.

Future Outlook

The energy sector’s future in India appears promising with substantial investments in both thermal and renewable capacities. The focus on balancing traditional and modern energy sources is crucial for sustainable growth. This integrated approach is expected to enhance energy security and contribute to India’s commitment to reducing carbon emissions.

Questions for UPSC:

1. Critically analyse the impact of India’s increasing coal-based power capacity on its environmental commitments.
2. What is the significance of renewable energy in India’s energy strategy? Discuss with suitable examples.
3. Estimate the role of government policies in enhancing domestic renewable energy manufacturing capabilities.
4. Point out the challenges faced by nuclear and hydro energy projects in India. How can these challenges be mitigated?

Answer Hints:

1. Critically analyse the impact of India’s increasing coal-based power capacity on its environmental commitments.

1. Increased coal-based capacity contributes to higher greenhouse gas emissions, contradicting India’s climate goals.
2. Coal power’s reliance hampers the transition to cleaner energy sources, affecting renewable energy growth.
3. India’s commitments under the Paris Agreement may be undermined by continued investment in fossil fuels.
4. Health impacts from air pollution due to coal combustion can lead to increased healthcare costs and societal issues.
5. Balancing energy needs with environmental commitments necessitates a strategic shift towards renewables.

2. What is the significance of renewable energy in India’s energy strategy? Discuss with suitable examples.

1. Renewable energy diversifies India’s energy mix, reducing dependence on coal and enhancing energy security.
2. Examples include the ambitious target of adding 30 GW of renewable capacity, promoting solar and wind energy.
3. Government initiatives like the CPSU scheme and PM Kusum Scheme support renewable energy growth and manufacturing.
4. Renewables contribute to job creation in green technology sectors, boosting the economy.
5. Transitioning to renewables aligns with India’s commitment to reducing carbon emissions and combating climate change.

3. Estimate the role of government policies in enhancing domestic renewable energy manufacturing capabilities.

1. Government policies like the Approved List of Models and Manufacturers aim to boost domestic production of solar components.
2. Incentives under schemes like CPSU and PM Kusum facilitate investment in renewable energy infrastructure.
3. Support for backward integration in manufacturing enhances competitiveness and reduces reliance on imports.
4. Policy frameworks help lower costs of production, making domestic renewable energy projects more viable.
5. Increased manufacturing capacity from 67 GW to over 115 GW reflects positive government influence on the sector.

4. Point out the challenges faced by nuclear and hydro energy projects in India. How can these challenges be mitigated?

1. Nuclear projects face long gestation periods and high initial costs, making financing challenging.
2. Hydro projects encounter execution risks due to geological and technological complexities.
3. Public opposition and safety concerns can delay project approvals and implementation.
4. Mitigation strategies include improved project management practices and enhanced community engagement.
5. Government support through streamlined regulations and funding can facilitate smoother project execution.