Outlook for India’s Power and Renewable Energy Sector in 2021

The power generation industry has been witnessing a major transformation globally in the last few years this will be expected to continue in the coming years as well. This resulted in changing energy generation mix and shift from conventional sources to renewable sources. The industry has observed some key trends like Sustainable power development; focus towards the various concerns related to climate change came along with eco-friendly policies. It is largely expected that the industry may witness greater acceleration towards eco-friendly “Green Power” solutions going forward.

India’s need for energy is increasing rapidly, owing to economic growth and overall industrialization and urbanization over the past few years and according to the latest Government statistics, in FY20, the gross electricity consumption has gone up to 1,208 kWh per capita and the peak electricity demand to 183 GW.

As of March 2021, India’s total installed power generation capacity is 379 GW. This includes 91 GW of capacity from Renewable Energy Sources. Of this, 10 GW capacity is from Biomass power (Bagasse and Non-Bagasse), followed by 147.6 MW from Waste to Energy, according to the Ministry of New and Renewable Energy (MNRE)*.

According to the 19th Electric Power Survey conducted by the CEA, the all-India installed power generation capacity is projected to grow to 619 GW by the end of FY27. The peak electricity demand has been estimated as 226 GW during FY22 and 299 GW during the year FY27.

The International Energy Agency (IEA) estimates indicate that India will add between 600 GW to 1,200 GW of additional new power generation capacity before 2050.

Captive Power Generation Scenario
Globally, captive power generation is the key growth enabler for many manufacturing industries, where grid disturbances in the supply of power can affect their operations. Owing to the increasing demand for power from emerging industrialized economies such as China, India, Africa and the Middle East, the investment in captive power plants is expected to remain strong. 

In India, increasing investments in the industrial sector driven by the ‘Make in India’ initiatives, the rising input costs (energy) and electricity prices, coupled with stringent government regulations, are expected to drive investment in the establishment of captive power plants for continued uninterrupted power supply leading to sustainable industrial operations. 

Captive power generation units can be fired by using both fossil fuel and renewables. The largest market for captive power generation in the country is the Industrial sector, mainly on account of the increasing demand for electricity from energy-intensive industries such as Cement, Iron & Steel, Petroleum Refineries and Chemicals etc. 

Improvement in coal supply, increasing awareness of renewable energy, eco-friendly power generation policies will enhance the captive power additions in the country. According to the Ministry of Power, the installed captive power generation capacity (above 1 MW capacity) associated with industry-owned plants is 78,000 MW or 78 GW as of 31 March 2020. 

Arun It is expected that the installed captive power generation capacity in India to grow at around 5-6% over the next 3 years, till 2023. 

Renewable Energy Industry
Globally, there is an increasing focus on the replacement of existing coal-fired power plants with clean fuel generation in order to reduce carbon footprint and this will further augment the demand for renewable power generation in the future.

Renewables comprised of non-thermal (such as Hydro, Solar and Wind) and thermal energy sources. For example, the Independent Power Producers (IPPs) played a major role in generating the power for sale to the grid or specific customers. For the majority of the IPPs, a Feed-in Tariff (FiT) or Power Purchase Agreement (PPA) provides a long-term price guarantee in the renewable energy sector. 

The Combined Heat and Power (CHP) systems or Co-generation system generates electricity or mechanical power with lower emissions compared to conventional power generation systems (fired using fossil fuels). Thus, CHP systems/technologies are widely preferred for captive power generation using thermal renewable energy sources such as Bioenergy, Waste Heat, Residual Waste, Solar Thermal and Geothermal, for applications such as District Heating and Data Centers etc.

Thermal Renewable Energy Industry
For thermal renewable energy, Bioenergy will remain the prime source. Its share is expected to decline due to the expansion of alternate renewable power generation technologies, namely Solar, Photovoltaic and Wind. Higher acceptance of Bioenergy will increase investment in Biomass power plants globally. In SouthEast Asia, the biomass generation capacity is expected to increase to almost 19 GW by 2040.

According to MNRE, the total capacity of 10,145 MW or 10 GW has been installed in Biomass Power and Bagasse Co-generation Sector as of March 2021.

The Bioenergy potential in India has been estimated at 25 GW in 2022, and the Government of India (GoI) has been consistently promoting the Biomass Power and Bagasse Co-generation programme. India’s current bagasse-based co-generation target from the Sugar industry in 2022 is 10 GW and by 2027 is 16 GW, according to MNRE estimates. This target is possible if there is a significant increase in sugarcane crushing capacity, favorable weather conditions and increased yields of sugarcane, leading to higher utilization of bagasse-based co-generation target in the future. 

Biomass (bagasse and non-bagasse) as fuel helps the CHP system to generate power that is sustainable. Industrial use of bagasse-based co-generation, particularly from sugar and palm oil mills, is conducive to the production of power from biomass.  The Pulp and Paper industry constantly focuses on improving energy efficiency, which is attained through increased use of non-bagasse (e.g. wood waste) based fuel for power generation, and by appropriate usage of steam.

The waste heat recovered from other industrial sources or processes is commonly found to generate steam and electricity in Cement processing, Iron and Steel processing, Petroleum Refining and Chemical processing etc. The total estimated energy generation potential from waste heat in India across various industrial sectors is around 5,000 to 7,500 MW, according to a report published by MNRE.

Waste heat recovery (WHR) power plant installed in cement plants, uses the heat generated through rotary kiln preheater (PH) and after quenching cooler (AQC) exhaust hot gases for power generation. According to the estimates released by Mission Energy Foundation, the waste heat recovery potential in the Indian cement industry alone is close to 750-1,000 MW, indicating a huge opportunity for the adoption of the Waste Heat Recovery (WHR) system. Despite having the high initial cost of investment, the concept of waste heat recovery is slowly picking up across the country. 

Residual waste is another source of input from the disposal of Municipal Solid Waste (MSW) and is treated with various WtE technologies (such as incineration and gasification) for electricity generation. The Asia-Pacific market is also expanding rapidly owing to a significant increase in waste generation by the two big developing nations such as China and India, leading to higher investment thrust by the Government organizations in India.

The Indian Government is providing incentives and subsidies for the use of renewable technologies, in order to generate more and more power through waste utilization. There is a great potential for waste to energy power generation in our country, however, the production is still in a nascent stage. To build a WtE plant requires a high initial cost of investment which is another major cause of concern. To overcome this, Niti Aayog, under Swachh Bharat Mission, has proposed to set up Waste-to-Energy Corporation of India, which would construct incineration-based WtE plants through the Public-Private Partnership (PPP) model. According to MNRE, the total estimated energy generation potential from urban and industrial organic waste in India is approximately 5,690 MW. 

To conclude, a rapid increase in electricity consumption, along with a growing focus on electricity generation through thermal renewable energy sources, is expected to unleash sustainable power generation in the country.

- Arun Mote, Executive Director & CEO, Triveni Turbines