India Falling Behind on Near-Term Renewables Aim, ReNew Says
(Bloomberg) -- India may be one of the fastest-growing power markets, but it’s running behind in its goal for renewables capacity next year, according to one of the country’s biggest producers of clean electricity.
The country will have built 130 gigawatts of renewables capacity including wind and solar by 2022, short of reaching the government’s target of 175 gigawatts, said Sumant Sinha, chairman of ReNew Energy Global Plc, in an interview Thursday. The country would likely have auctioned the remaining 45 gigawatts of capacity by the end of 2022, which can get built in another 12 to 18 months, he said.
Still, there is a “fairly good chance” that the South Asian economy will reach its 2030 target to construct 450 gigawatts of capacity, Sinha said. Clean power initiatives will pick up the pace as some of India’s biggest energy companies join in and banks refuse to fund new coal plants, he said.
The world’s third biggest emitter of greenhouse gases has come under international pressure to set higher targets to reduce emissions. India has countered with ambitious plans to roll out clean energy, and the program is likely to be the highlight of its negotiations at COP26 climate talks starting in Glasgow next week.
India recently reached 100 gigawatts of renewable power capacity, and is close to having 40% of installed capacity run on non-fossil sources, a target it had set for 2030. Yet, obstacles including the pandemic, lack of enough transmission facilities and attempts by some provinces to renegotiate power purchase contracts have slowed progress.
To achieve the 450-gigawatt renewable power target, the nation would need to commission plants at a record speed of more than 35 gigawatts every year through the end of the decade. But those prospects are looking brighter, according to Sinha, whose company is backed by investors including Goldman Sachs Group Inc. and listed on Nasdaq in August.
Fossil fuel giants from Reliance Industries Ltd., Adani Group, JSW Energy Ltd. to state-run NTPC Ltd. and Coal India Ltd. are committing investments in clean energy, raising prospects that these heavyweights will help bring down costs further. At the same time, cheaper battery storage could make solar and wind power more popular for round-the-clock use.
One problem still largely remains unsolved, according to Sinha.
Power distribution companies in India -- responsible for buying electricity from generators and supplying to consumers -- remain a weak link in the system. These government-controlled utilities struggle with power thefts and pending bills of users, resulting in delayed payments to producers and causing financial stress across the industry. The losses deter utilities from making necessary investments in technology and network overhauls, Sinha said.
“If the distribution utilities were to invest in better software, better demand-management systems, the ability to absorb renewables would have been better,” Sinha said, adding that the government is looking at passing legislation to liberalize the sector.
©2021 Bloomberg L.P.