Nearly 75 percent of power in India is still generated from coal. While coal-fired power generation is still growing, ambitious clean energy policies and falling solar costs could soon stop this trend.
Since demand for energy in India is set to double over next decade caused by the rapid growth of its economy and population, its complete rejection of coal dependence in the near future seems far too big of a challenge.
However, this is a perfect timing for the entrance of renewables—especially solar—with almost 300 days of sun a year and with Prime Minister Narendra Modi who is pushing his country further into renewable energy.
India’s largest green energy producer, ReNew Power, used these circumstances to raise more than $1 billion in funds this year alone for its wind and solar business, performing its part in pushing this country towards renewable energy.
Part of the funds were secured from Goldman Sachs, Abu Dhabi Investment Authority, and Canada’s Pension Plan Investment Board, who injected $100 million each at the end of June for financing projects within its existing pipeline.
ReNew Power secured another $350 million earlier this year from existing investor OverSeas Private Investment Corp (OPIC), the U.S. government's development finance institution, and another $375 million by issuing green bonds. It followed previous loan from March 2016 when OPIC granted a loan of $250 million to ReNew Power for the construction of new wind and solar power plants. Related: Is This Big Oil’s Next Secret Weapon?
“Historically, India’s energy has been based on coal, primarily for generating electricity,” said Sumant Sinha, ReNew Chairman and founder. “But now renewables have become so much cheaper, about 30 or 40% cheaper than coal, that going forward a large part of the demand is going to be met through renewable energy sources.”
With a total capacity of over 7 GW of wind and solar power assets across the country and a broad base of equity investors, ReNew Power is a significant player in energy transition of India. In eight years of operations, ReNew Power operates more than 100 wind and solar plants generating about 1 percent of India's total electricity.
Other companies are also getting involved in the Indian energy race. Sovereign wealth funds GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority (ADIA) have agreed to pump in an additional $329 million into Greenko Energy Holdings, which follows the $495 million investment in June by the sovereign wealth funds in Greenko to build power storage projects.
According to World Economic Forum data, India is producing the cheapest solar power. The costs of building large-scale solar installations in India fell by 27% in 2018, year-on-year, thanks to a combination of low-priced panel imports from China, abundant land, and cheap labor. Between 2010 and 2018, setup costs in India fell by 80%, the most precipitous decline of any country.
India also increased its solar energy capacity from less than four GW in 2015 to nearly 30 GW, which is about 8 percent of its total energy capability. Investing heavily in renewable energy, India is setting an even bigger goal of 175 GW of renewable energy by 2022, with 100 GW to come from solar power, 60 GW from wind, 10 GW from biofuels, and 5 GW from hydropower. Related: Oil Plunges As Iran Conflict Cools
"We are accelerating the pace of renewables in a very, very big way," said Amitabh Kant, CEO of National Institution for Transforming India. "India's biggest strength is not in coal but in the sun. I think in the next three to four years you will realize that the acceleration towards renewables will be phenomenal."
Although the coal sector in India is showing signs of struggling, with 220 GW of coal capacity in operation and another 36.12 GW under construction, and seeing 491 GW cancelled in the last eight years, according to Global Coal Plant Tracker data, it is unlikely to expect that coal will disappear in India, the world's second largest producer and importer after China.
ADVERTISEMENT
According to the International Energy Agency forecast, India is expecting doubled demand for energy by 2040, which leaves a lot of need for coal as the main energy source, even with an increase in renewables.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
- Shale Investors Fear Bloodbath As Earnings Season Kicks Off
- Fracking Under Fire In California
- Why Oil Tankers In The Middle East Shouldn’t Hire Mercenaries
“But now renewables have become so much cheaper, about 30 or 40% cheaper than coal, that going forward a large part of the demand is going to be met through renewable energy sources.”
There is zero data to backup this statement.
These types of invalid assumptions make it difficult to take the content of the article seriously.