The year 2021 was a landmark one for climate change and for those working to mitigate its increasing effects. The world saw an intensification of climate disasters, such as forest fires in North America, cyclonic storms in India and the recent Typhoon Rai that wreaked havoc in the Philippines. All of this has propelled climate change to the top of the global agenda like never before. We witnessed world leaders, including Prime Minister Narendra Modi, gather in Glasgow for CoP-26 and saw 29 more national commitments of net-zero by the summit’s close, bringing the total to 74 countries, representing 90% of global gross domestic product (GDP).
In 2022, all renewable energy (RE) players will have to double down on the hard work already done to achieve steeper RE targets set at CoP-26, such as India meeting half its overall energy needs from renewables by 2030 and achieving net zero by 2070.
So, if 2021 was a revamped launching pad, then 2022 is the year in which RE growth needs to be catapulted higher to hit the country’s stretch climate targets, including cutting the economy’s carbon intensity by 45%. The challenge is tangible now that the government has revised its target for 2030 to 500GW of non-fossil-based installed capacity, up from 450GW. The current year will indicate how our accelerated drive towards these stretch goals plays out.
For its part, ReNew Power has been pitching in. We have added 1.5GW of operational RE capacity in 2021-22 to date, taking our total installed capacity to 7.4GW. We’re on track to reach our aspirational goal of 18GW by 2025. Yes, this is about meeting business targets, but it is also about being part of an ‘all hands on deck’ national effort to meet India’s climate goals. Clearly, ReNew and its RE industry peers have a mammoth task ahead. In view of this, I would like to suggest a few key measures in 2022 to enable the RE sector to accelerate its capacity expansion and innovate rapidly.
More auctions: Given the challenges of intermittency in renewables, grid resilience must improve through more auctions of firm round-the-clock RE projects by Solar Energy Corporation of India (SECI). This will ensure flexible, on-demand power enabled through storage. SECI has done a stellar job so far and the programme it runs should be expanded immediately, as India would need at least 15-20 auctions for at least 30-40GW annually for years to come.
Also, battery storage systems will go a long way in addressing the challenge of intermittency of RE sources and improve the generation profile of renewable energy projects.
Moreover, as the share of renewables in the country’s energy mix increases, there will be a need to improve grid flexibility and enhance transmission networks.
Discoms health check: The fiscal health of power distribution companies (discoms) needs to be addressed urgently, so that they invest more in grid upgradation for the absorption of 500GW of non-fossil fuel capacity. Delicensing of the sector is a close-to-ideal solution. It would enhance consumer choice, increase RE demand and raise investor confidence. The government has taken some positive steps. The government’s reforms-based and results-linked, Revamped Distribution Sector Scheme is expected to improve the operational efficiency of discoms by providing financial incentives tied to performance.
Protect contracts: Ensuring contractual sanctity is critical to ensure certain states don’t question signed power purchase agreements (PPAs) or inordinately delay payments to RE players. If PPA contracts are not honoured, it impacts the business climate in any sector. While substantive legal precedents exist in the power sector for enforcement of contracts, the Centre can work more closely with states to ensure greater adherence to contracts.
Taxes and duties: As RE players need to boost their efforts, rationalization of duties and taxes will certainly help. If import duties are not kept low for the next 3-5 years for battery storage and green hydrogen equipment, it would be challenging to develop a local manufacturing ecosystem. GST on RE should be a maximum of 5%.
Green light for green hydrogen: For meeting climate goals, green hydrogen is the exciting new frontier. If developed rapidly, it can slash India’s huge reliance on polluting and expensive fossil fuels used in hydrogen production (95% of global hydrogen output till 2020 was grey hydrogen, with green hydrogen a minuscule 0.1%). This will be critical in decarbonizing the hard-to-abate chemical, industrial and transportation sectors.
It’s encouraging to see that the Centre has been prescient in spotting the potential of green hydrogen and launched the National Hydrogen Mission last year. But greater investments in electrolyzers, as well as targeted policy interventions such as clear-cut green hydrogen obligations, will help the cause.
In this context, ReNew has partnered with L&T for developing green hydrogen capacity. On a broader level, multi-stakeholder partnerships involving scientists, industry, multilateral institutions and investors will play a key role.
Our RE goals for 2030 are both beckoning and daunting. The coming year will be critical for India’s once-in-a-lifetime clean energy transition and in determining whether we reach those life-saving climate goals for the sake of future generations.
Sumant Sinha is the chairman and chief executive officer of ReNew Power
