By Somit Dasgupta
During the deliberations at the Conference of the Parties (COP 26) in Glasgow (2021), the Indian government had announced the “Panchamrit” where one of the targets was to have at least 50% of the generation capacity consisting of non-fossil sources by 2030. We have already achieved this target five years ahead of schedule as we have a non-fossil capacity of 242.8 gigawatts (Gw) out of a total capacity of 484.8 Gw. Seeing this, one wonders if the target was too soft to begin with. At the time of the Panchamrit announcement, we already had a non-fossil generating capacity of about 163 Gw which was almost 41% of the total capacity. So reaching a 50% share of non-fossil capacity was not that difficult, especially since our pace of coal-based plants has slowed down. The other issue is whether capacity is the right measure or should the target have been set in terms of generation from non-fossil sources. After all, renewable capacity does lie idle frequently on account of many factors. Incidentally, there is a tendency to use share in capacity and generation interchangeably, including in government documents, but this is erroneous since capacity utilisation for renewable sources like solar and wind is much lower than that of conventional generation, meaning coal. So today, while the share in capacity of solar and wind is about 35%, their share in generation is only 12.5%.
Coal’s long shadow
Coming back to the central theme of the piece, what should be the major policy measure beyond 2030? The government, in a way, has tacitly admitted that we are going to continue with coal-based generation till 2047 by which time, hopefully, we will achieve a developed country status. In fact, there has been a recent announcement that a fresh coal capacity of 97 Gw is being planned, and let’s not forget that such plants will have a life of 40 years. So, a plant which starts generating around 2030 will be alive and kicking at least till 2070. In addition, retirement of old coal-based plants have been put on the back burner. However, if we are still serious about going net zero by 2070, the course of action would be very different. We will need to add to renewable capacity at a rate much faster than our historical growth. The problem, however, is that one cannot go on making addition to renewable capacity without adding to storage. We have already reached a stage where during solar hours, the day-ahead spot market price is reaching near-zero when the demand is low. If we add more renewable generation, sans storage, we will have to take such generation off the grid since conventional generation will already be at the technical minimum and any further back-down of conventional generation may harm the machines. Similarly, we cannot go on adding storage capacity with inadequate renewable growth since the usage of this storage will be sub-optimal and financing such a project may run into problems. In my opinion, renewable growth will have to precede storage. Once enough renewable capacity is created, investment in storage will follow almost automatically.
Storage and renewable push
Some steps have been taken in the recent past to promote storage, both of batteries and pumped storage. A viability gap funding scheme has been initiated to bring down the cost of battery storage and one is seeing the levellised cost of energy using co-located batteries drop to somewhere around `3.50 per unit, which is equivalent to the variable cost of coal-based generation. In addition to this, fresh guidelines have been framed to give quick approval to pumped storage plants (PSPs). Along the lines of renewable purchase obligation, something called energy storage obligation has been put in place where distribution companies will have to necessarily provide for storage for a certain percentage of their power purchase. Both battery storage or pumped storage have their own pros and cons. Battery storage may be relatively cheap but can provide a backup of two to four hours. In contrast, PSPs can provide electricity for longer hours, maybe six to eight hours. Battery storage can be built up quickly whereas PSPs may take about eight years to become functional. Batteries are mainly lithium-ion, and there are supply-side bottlenecks when it comes to lithium. Other battery technologies like sodium-ion are still a work in progress and do not enjoy the economies of scale like lithium-ion which has had a head start. Incidentally, we have made some headway in storage and projects, aggregating to about 31 Gw tendered since 2022. The preference, it seems, is for battery storage vis-à-vis PSPs (Institute for Energy Economics and Financial Analysis and JMK Research).
The moot point is whether we are doing enough to add to renewable capacity, which is a prerequisite for building up storage. The answer is no. Though we have said that we will add 50 Gw of renewable capacity every year for five years starting from 2023-24, what we have actually added in 2023-24 and 2024-25 is only 18 Gw and 28 Gw respectively. During 2025-26 (till July 2025) we have added 15 Gw. Our average for the last decade is about 11 Gw. We need to revisit our policies of carrying on with the approved list of models and manufacturers and also do away with protectionist policies like imposition of basic customs duties. Our grid infrastructure needs to be adequate to provide quick connectivity to renewable generators. State governments need to be proactive and assist the developers in land acquisition and also ensure timely payments to renewable generators. This is only an illustrative list of what needs to be done and is by no means exhaustive.
The writer is senior visiting fellow, ICRIER.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.