India requires 33.6 trillion to meet growing electricity demand and renewable targets

Wind energy

India will need Rs 33.60 trillion to build additional electricity generation capacity to meet its growing demand, which is expected to reach 2,473.8 billion units by 2031-32, with a peak power demand of 366.4 gigawatts (GW), according to the National Electricity Plan (NEP) notified by the government for the period of 2022-2032.

The total fund requirement for the period 2022-2027 is estimated to be Rs. 14.54 trillion, which also includes the likely expenditure during this period for projects expected to be commissioned between 2027 and 2032, as stated in the NEP.

Out of the Rs. 14.54 trillion, Rs. 3.38 trillion will be allocated for conventional power capacity addition, with Rs. 2.18 trillion for coal-fired plants and Rs. 1.20 trillion for nuclear plants. The remaining Rs. 11.15 trillion will be allocated for renewable energy, with the majority going towards solar (Rs. 6.80 trillion) and wind (Rs. 2.30 trillion).

The total fund requirement for the period 2027-2032 has been estimated to be Rs. 19.06 trillion. Out of this, Rs. 2.28 trillion will be allocated for conventional capacity addition, with Rs. 1.85 trillion for coal and Rs. 43,051 crore for nuclear. Additionally, Rs. 13.84 trillion will be allocated for renewables, and Rs. 2.92 trillion will be allocated for battery energy storage systems (BESS).

The NEP (Vol-I Generation) for the period of 2022-32 was notified by the Central Electricity Authority (CEA) on May 18 and made public on May 31. The NEP is an official document where the government reviews India's power sector over the past five years (2017-2022) and offers a detailed plan for the next five years (2022-2027). This edition of the NEP also provides a perspective plan for the period of 2027-2032.

The document also states that developers will be required to invest a total equity amount of Rs. 3.63 trillion and arrange for a total debt of Rs. 10.90 trillion for the period of 2022-2032. Similarly, for the period of 2027-2032, the estimated equity and debt requirement (excluding fund requirement for projects beyond March 31, 2032) are Rs. 4.76 trillion and Rs. 14.29 trillion, respectively.

According to the NEP, the likely installed capacity for the period of 2022-27 will be 609,591 megawatts (MW), including 273,038 MW of conventional capacity (coal-235,133 MW, gas-24,824 MW, nuclear-13,080 MW) and 336,553 MW of renewable-based capacity (large hydro-52,446 MW, solar-185,566 MW, wind-72,895 MW, small hydro-5,200 MW, biomass-13,000 MW, pump storage plants-7,446 MW), along with 8,680 MW/34,720 MWh of BESS capacity.

The likely installed capacity for the year 2031-32 is estimated to be 900,422 MW, comprising of 304,147 MW of conventional capacity (coal-259,643 MW, gas-24,824 MW, nuclear-19,680 MW) and 596,275 MW of renewable-based capacity (large hydro-62,178 MW, solar-364,566 MW, wind-121,895 MW, small hydro-5,450 MW, biomass-15,500 MW, pumped storage plants-26,686 MW, excluding 5,856 MW of likely hydro-based imports), along with 47,244 MW/236,220 MWh of BESS capacity.

At COP26, India made two commitments: to meet 50 percent of its energy needs from renewable fuels by 2030 and transition to a net-zero carbon economy by 2070.

Subsequently, at COP27, India pushed for countries to agree to phase down the use of fossil fuels rather than phase them out, receiving support from many, including the European Union. The rise in energy prices and supply chain disruptions following Russia's attack on Ukraine renewed global interest in coal.

Also read: India will need 51,000 MW additional coal-based capacity by FY32 to meet growing power demand: National Electricity Plan.