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India's electricity sector on cusp of solar-powered revolution, says International Energy Agency

Once the coal‐fired power plants currently under construction are completed over the next few years, there is unlikely to be a net growth in India’s coal fleet.

February 09, 2021 / 12:40 PM IST
Representative image.

Representative image.

The share of coal in India’s overall energy mix is expected to decline from 44 percent in 2019 to 34 percent in 2040 triggered by the country’s push in the renewable sector, especially solar, said estimates by the International Energy Agency (IEA) in its India Energy Outlook released on February 9.

The report highlighted that India is on the cusp of a solar-powered revolution in the electricity sector. The Indian government has set a roadmap of achieving 175 gigawatt (GW ) of renewables by 2022 – including 100 GW of solar and 60 GW of wind capacity.

Once the coal‐fired power plants currently under construction are completed over the next few years, there is unlikely to be a net growth in India’s coal fleet. Coal‐fired generation was most exposed to the dip in electricity consumption in 2020 due to the pandemic. The report states that coal suppliers will have to increasingly turn to industrial consumers than other sectors for growth.

Solar accounts for less than 4 percent of India’s electricity generation now, and coal close to 70 percent. Based on the India Energy Outlook, both will converge in the low 30 percent by 2040. It added that the dramatic turnaround will be driven by India’s policy ambitions, notably the target to reach 450 GW of renewable capacity by 2030, and the extraordinary cost‐competitiveness of solar, which out‐competes existing coal‐fired power by 2030 even when paired with battery storage.

“The additional funding for clean energy technologies required to put India on a sustainable path over the next 20 years is $1.4 trillion, or 70 percent, higher than in a scenario based on its current policy settings,” the report said

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The report highlighted that India’s electricity demand is set to increase much more rapidly than its overall energy demand. On the demand side, the key contributor to variability comes from rapid growth in ownership of air‐conditioning units. Electricity demand for cooling is expected to increase six‐fold by 2040, creating a major early evening peak in electricity use.

On the other hand, India’s combined import bill for fossil fuels may triple over the next two decades, with oil by far the largest component, pointing to continued risks to India’s energy security, the report said. It added that domestic production of oil and gas will continue to fall behind consumption trends and the net dependence on imported oil will rise above 90 per cent by 2040, up from 75 per cent today.

COVID-19 to impact India’s demand growth

Prior to the global pandemic, India’s energy demand was projected to increase by almost 50 per cent between 2019 and 2030, but growth over this period is now closer to 35 percent in current policy scenario, and 25 percent in the delayed recovery scenario, the report added. “The latter would put some of India’s hard‐won gains in the fight against energy poverty at risk, as lower‐income households are forced to fall back on more polluting and inefficient sources of energy,” it stated. The slump in energy investments was to the tune of 15 percent in 2020.
Shine Jacob
first published: Feb 9, 2021 12:25 pm

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