“Frost & Sullivan recently released its new Global Renewable Energy Outlook. What are the key findings of the report?”
Global investments in new power plants were more than $400 billion during 2019; renewable sources of generation had a significant role to play with close to 75% share in these investments worldwide. Among the renewable sources, investment in solar was the largest at nearly 45% share. Renewable technologies are being adopted rapidly across all regions, except for a few countries. Latin America, Africa, and the Middle East continue to experience the fastest growth in installed capacity in recent years due to their small installed base. However, Asia continued to drive more than half of the total capacity addition and expected to hold the pole position until 2025. Solar rules the renewable energy market, even with a significant drop in capacity additions by China, post its decision to limit subsidies. Already growing at the rate of 18 to 20% annually in recent years, global solar installed capacity has crossed the 500 GW mark and will soon surpass wind to become the largest source of renewable power worldwide. Globally, feed-in-tariffs (FiTs) have been the preferred method to obtain investments in renewables. However, an increasing number of countries are progressively cutting subsidies, compelling the renewables industry to rely on competitive auctions and private-sector power purchase agreements (PPAs). Strong growth in renewables will continue with wind and solar PV taking the lead world over; other technologies including geothermal, biomass, hydropower, and ocean power will expand slowly. The overall global renewable-based power generation capacity addition is expected to grow between 12 to 14% YOY for the next three years.
“What are the key trends in India’s renewable energy industry?”
A closer look at India’s journey in the renewables sector since 2014, when it embarked on an ambitious new renewable energy roadmap targeting 175 GW of renewables by 2022, indicates that 2019 was one of the most challenging years. Although the overall capacity is likely to have crossed 90 GW as of date, current trends in the sector have pointed to a host of fundamental issues with the industry – rising payment dues from distribution utilities, delays on project execution front owing to land issues, inadequate growth in transmission infrastructure to support the sectors’ pace of growth, among the notable ones. With a slowing global economy, the liquidity crunch was especially visible in the Indian renewable sector where banks have been reluctant to support the sector due to all the prevailing uncertainties. Weak bond markets, low tariff ceilings, and rising debt levels among traditional investors have prompted many M&A deals where companies have been selling off assets in recent months.
“What role can energy storage technology play in India’s sustainable power generation?”
Years 2018 – 2019 marked the beginning of the changing trend with a steady stream of tenders for grid-scale energy storage projects in India. In terms of technology, battery-based energy storage systems are the most sought-after technology for large-scale grid projects. Globally, these battery-based energy storage systems are on the brink - at $300-400 per kWh, battery prices have fallen drastically by nearly 70% over the last 4-5 years. However, in the Indian context, prices are still a barrier to entry. There has not been any dearth for applications and use cases – both in KW and MW scale projects in recent years. The integration of intermittent sources of power from renewables into the primary grid is undoubtedly the most prominent application for energy storage. However, other application areas of grid management – like peak load management and enhancing system flexibility - are also being tested. To date, there have been various projects and tenders on the integration of renewable power with storage – however, the long-term economic and commercial viability of these projects is yet to be established.
“MNRE has set a target of 175 GW of RE generation by 2022. What are the key drivers that will play a facilitating role in achieving this ambitious target?”
The Ministry of New and Renewable Energy (MNRE) was tasked to implement the ‘175 GW of renewables by 2022’ plan of which 100 GW was set for solar, 60 GW for wind, and the rest between other technologies. A closer look at the largest of the planned renewables – solar shows that since the inception of the plan, India has come close to achieving its annual planned target capacity addition only during the first year of the plan (fiscal 2016). Recognizing the challenges faced by the renewables segment, MNRE has, over the years, revised the targets – and in most cases reduced it. Chasing an aggressive target of 100 GW of solar by 2022, India needs to build on an average 2.3 GW capacity per month for the next three years which is no mean feat considering India’s average has never crossed 1 GW. Significant hurdles need to be addressed to facilitate target achievement. In the current context, uncertainty looms over India’s ability to meet the planned RE targets of 175 GW by 2022. Considering domestic challenges, the renewable sector needs a reset to achieve its eventual goals – instead of expecting the tariffs to always remain low, which was originally the intent by design - the right balance between quality, sustainability, timeliness and returns needs to be achieved.
“The Asia-Pacific microgrid market is poised for exponential growth. Please tell us about the opportunities and challenges within the sector. Where does India stand in contrast to global growth?”
India’s microgrid market is represented mainly by solar rooftops, which comprises of grid-tied as well as off-grid/open access and captive installations. In all, this market is estimated at nearly 3.7 GW of installed capacity as of the end of the fiscal year 2018-19. A far figure from the set target of 40 GW by 2022, primarily due to the several issues faced by the segment – bad financial health of distribution utilities and their reluctance to promote rooftop solar, high subsidies and cross-subsidization in particular for agricultural power, and many state-level policy hurdles and restrictions to open access growth. The commercial and industrial segment share of rooftops stood at nearly 83% as of the end of the last fiscal year – while residential had a mere 18% share of the installed capacity. A common challenge for all categories of consumers is the numerous constraints and caps associated with net metering regulations across the states. While most states have introduced net metering guidelines, most states often restrict the maximum capacity as well as the amount of power that can be supplied back to the grid, thus constraining the cost economics. Considering the country’s potential for mass deployment of solar rooftops, the outlook remains positive.
“India is witnessing a new transition towards E-Mobility. What would be the key market growth drivers?”
Concerning eMobility and electric vehicles (EVs), the first wave is already underway. The low cost of acquisition and need for cleaner last-mile connectivity solutions have driven the electrification of rickshaws and two-wheelers in the Indian market so far. Recognizing the need for a more significant role of EVs in the Indian context, the Faster Adoption, and Manufacturing of Electric Vehicles II (FAME II) initiative was launched in March 2019. To enhance EV adoption, the GST on EVs and charging stations was reduced to 5%. Grid-scale/grid-connected energy storage systems together with large-scale adoption of EVs are likely to be a game-changer in the future to positively impact India’s energy security, economy, environmental security, as well as job economy. Frost & Sullivan estimates that the Indian EV market size is expected to reach $100 billion by 2030.
“The Indian Government has been aggressively promoting the adoption of eMobility under the FAME II scheme. With this kind of thrust, what business prospects do you foresee for India’s E-Mobility transition?”
A range of both supply-side and demand-side incentives are required to enable a smooth transition from traditional mobility to eMobility-driven future. eMobility and EV charging infrastructure ecosystem will need to evolve hand in hand and this presents opportunities to a whole range of stakeholders – Landowners/real- estate dealers, power utilities, vehicle OEMs, vehicle owners, banks and financiers, EV charging station manufacturers, shared service providers, etc. However, FAME schemes at this point are primarily focused on driving the electrification of public transportation and incentivizing domestic manufacturing of EVs with lithium-ion or other advanced batteries. EV charging infrastructure, on the other hand, lacks the necessary policy impetus. India currently has close to 293 community charging stations of which 22 are fast- charging points – most of them owned and operated by private companies in partnerships. The next set of alliances to build EV charging infrastructure has seen participation by state-owned national oil companies like Indian Oil Corporation, Hindustan Petroleum Corporation Limited, etc. in collaboration with major automakers like Hyundai; this is a move in the right direction. In the future, large companies may be advised to fast track the setup of charging stations at strategic locations under their Corporate Social Responsibility (CSR) budgets so that the eMobility plan can be given the required boost.
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