IN EARLY 1980s, Manoj Sinha, a resident of of the Hilsa area in Bihar, graduated from IIT Varanasi in electronics engineering. He then went to the U.S. to pursue his master’s and joined Intel to develop microprocessors. But he could never forget the life in his native village devoid of electricity. Along with three other classmates, Manoj developed a decentralised power generation and distribution network as a solution to a complete lack of access to electricity or a lack of reliable access to electricity. Customers were willing to pay, and soon, the experiment became a business.
Sinha formed a rural electrification company — Husk Power Systems — headquartered in the U.S. Husk has now built a total of 300 mini-grids in India and Nigeria. Husk’s business model is to design, build and operate 100% renewable plants (20-250kW) using mainly solar power and distribution networks of 4-5 km, and charge customers 30% lower than diesel gensets. “The potential of micro-grids in India is huge as it will take an integration of decentralised energy resources such as micro-grids with the centralised grid to systematically transition to the net-zero goal. We have already identified a pipeline of more than 450 sites,” says Manoj Sinha, founder and CEO, Husk.
Tata Power Company (TPC), one of India’s largest integrated power majors, has also started work on hydro pumped storage projects (PSP) projects. PSP is a commonly used technology, in which water is pumped from a lower elevation reservoir to a higher one using low-cost, surplus off-peak electricity to run generators. During peak hour demand, stored water is released through turbines to produce electricity to balance shortages in the grid.
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TPC will invest about ₹13,000 crore in two projects — a 1,800MW PSP at Shirawata in Pune and a 1,000MW PSP at Bhivpuri in Raigad. “We will commission these two by 2027-2028 and have identified three potential sites with 9,000MW capacity,” says Praveer Sinha, CEO and MD, Tata Power.
In Mumbai, serial entrepreneur and Avaada Group chairman Vineet Mittal is also busy planning a new venture in renewables. His seven-year-old firm is into renewable energy generation with 4.5GW operating capacity in solar and wind and 4.5-5GW under construction. Avaada plans to manufacture solar PV cells, green ammonia, green methanol, and sustainable aviation fuel and energy storage solutions.
Mittal founded Welspun Renewables in early 2000 when solar was not even considered a potential business, grew it into a large venture and sold it to Tata Power for ₹10,000 crore in 2016. Another group firm, Avaada Water Battery, is all set to implement the Chicklik Pumped Storage Hydro project at Sonbhadra in U.P. “We have received state approval for the 1,567MW project. Environmental, other clearances are going on,” says Mittal.
It is the likes of Husk, Tata and Avaada’s initiatives that are firing up the domestic renewable energy sector. The target to install a minimum of 500GW capacity by 2030 calls for a new approach to RE power generation, not just scaling solar and wind projects and consuming huge tracts of land.
To stabilise the grid with renewables and meet peak power demand, new capacity addition requires innovative renewables such as pumped hydro, floating solar, and hybrid solar and wind projects, solar-powered agri-pumps, biomass and waste-to-energy, rooftop solar, run-of-the-river small hydroelectric projects, firm and dispatchable renewable energy projects and battery energy storage systems, besides greater reliance on micro-grids.
India’s renewable energy sector — the fourth largest in the world — is undergoing a transition to this next stage to meet zero-carbon sustainable goals by 2070 and power an impending green hydrogen-fuelled economy.
The Macro Picture
As of October 2023, the installed capacity of thermal power stands at 207GW and that of RE at 179GW. India has committed to adding 500GW renewables by 2030, including 220GW of solar and 180GW of wind. Of the 132GW capacity under construction, nearly 100GW is renewable. Moreover, the government expects more than 464GW to be added by FY32, majority in renewables. The National Electricity Plan notified in May 2023 expects installed capacity to be 900GW by FY32, out of which carbon-free capacity will be 616MW.
It’s a herculean task to add an unprecedented 50GW every year to reach the 500GW RE goal by 2030. Though the government claims 100% electrification in villages through Central schemes, and improving health of discoms, power is still to reach a number of villages. Moreover, peak demand has gone up from 136GW in FY14 to 243GW in September 2023, a rise of almost 79%. The government claims the demand has been met and the difference in peak hour demand is only 1.4%, a 4.5% decline from 10 years ago. And as economic and agricultural activity pick up pace, stable and reliable power is the need of the hour, especially with demand growing 10% YoY. Once the RE component becomes the majority of the country’s energy mix, from 40% in 2023 to an anticipated 65% by 2030, issues of intermittency and grid stability are likely to get even more complex, say experts.
FDRE & BESS
ReNew, one of India’s leading renewable energy companies founded in 2011, has a portfolio of 15.6GW, among the largest in the world. Most of these are solar and wind farms and some bit of hydro. In May, ReNew won its first 1GW Firm and Dispatchable Renewable Energy (FDRE) project from SJVN Ltd. (SJVN), designated as the Renewable Energy Implementing Agency (REIA) by the Ministry of New & Renewable Energy (MNRE). FDRE, a combination of solar, wind and other renewable sources with dedicated battery storage, can provide round-the-clock power supply, and support discoms in meeting Renewable Purchase Obligation and Energy Storage Obligation. The power purchase agreement (PPA) was signed at a tariff of ₹4.39 per kWh, much higher than three solar PPAs totalling 800MW signed in the same week at ₹2.59 per kWh. However, it is still lower than coal-fired electricity at peak hour priced above ₹6 per unit. “These agreements, with a strong counterparty profile, will not only contribute to a cleaner future but deliver long-term financial benefits as well,” says Sumant Sinha, founder, chairman and CEO, ReNew.
Like ReNew, Tata Power Renewable Energy (TPREL) also won its second FDRE project from SJVN, a 460MW project integrating solar, wind, and battery storage technologies, in May. In November 2023, the company had won another 200MW FDRE project from SJVN. “By integrating renewable sources and leveraging the importance of FDRE, the tie-up will ensure a dependable power supply,” says Deepesh Nanda, CEO and MD, TPREL.
FDRE projects, which assure round-the-clock power from green sources, are meant to address the problem of intermittent and variable nature of renewable energy and low-capacity utilisation of the transmission system, which forces distribution companies to buy power at high rates to meet peak hour demand. “One crucial factor is that while prices are coming down, the efficiency and productivity of solar cells and modules is going up with better innovation and research, which will reduce the pressure on adding huge capacities in RE plans and meeting targets,’’ says Gyanesh Chaudhary, CMD, Vikram Solar, one of India’s leading solar equipment makers.
In June 2023, the government came up with guidelines for a tariff-based competitive bidding process for procurement of firm and dispatchable power from grid-connected renewable energy projects with storage systems. The FDRE mandates integrated ESS and power supply with a higher capacity utilisation factor. Solar Energy Corp. of India (SECI), SJVN, NHPC and NTPC will cumulatively tender around 11GW of FDRE projects, out of which SJVN and NTPC have already tendered 3-4GW. “Wind-solar-hybrid (WSHb) with battery storage solutions are comparable to conventional sources with levelised cost of electricity in the range of ₹4.2-4.5/kWh. In the coming years, the viability of this round-the-clock solution (WSHb plus storage) will depend on the reduction of battery storage prices,” says Rakesh Kalsi, MD, infrastructure practice, TruBoard Partners, which manages over 1GW of renewable energy assets on behalf of global equity investors.
Another move is to make stored renewable energy a viable option for managing peak power demand. In September last year, the government launched a plan to develop 4,000MWh of Battery Energy Storage Systems (BESS) by FY31 with incentives including a 40% viability gap funding on capital costs. The scheme has an initial outlay of ₹9,400 crore, including budgetary support of ₹3,760 crore. To enhance the integration of renewable energy into the electricity grid and minimise wastage while optimising the utilisation of transmission networks, a minimum 85% of the BESS project capacity will be made available to discoms. Further, the Ministry of Heavy Industries has launched a Production-Linked Incentive (PLI) scheme for manufacturing Advanced Chemistry Cell battery storage of 50GWh capacity, including more than 10GWh grid-scale storage. About 30GWh has already been allotted and the PLI-ACC scheme has an outlay of ₹18,100 crore, according to sources.
India’s first commercial utility scale standalone BESS project, promoted by power asset management firm IndiGrid and BSES Rajdhani Power Ltd. (BRPL) as a 20 MW/40 MWh project installed at BRPL’s Kilokari substation, recently received the approval of the Delhi Electricity Regulatory Commission. The project is supported by the Global Energy Alliance for People and Planet with a concessional loan (70% of the total project cost). “Through our concessional financing and strategic partnerships, we are driving innovation and sustainability in India’s energy landscape,” says Saurabh Kumar, vice president, India, GEAPP, which has committed 1GW of BESS in the country by 2026, aligning with the Centre’s target of deploying 47GW of BESS by 2032. “To maintain a reliable and economic power grid, the Central Electricity Authority (CEA) projects India will require over 60GW of energy storage by 2030, with 42GW (208GWh) of BESS capacity to meet grid needs for integrating 392GW of variable renewable energy,” says the GEAPP-RMI report titled Powering Progress: Batteries for Discoms.
Pumped Hydro & Floating Solar
Another key move for grid stabilisation as well as meeting peak power demand — which rose to 243MW in 2023 from 136MW in 2014 — is to set up PSP projects. Currently peak hour demand is mostly met by hydro power, but its availability goes down in summer when water flow in rivers decreases. “When you compare the cost of peak hour thermal power, PSPs are more financially viable,” says Mittal.
The power ministry came out with draft guidelines on PSPs in March 2023 to generate over 18GW. According to the ministry, India has on-river pumped storage potential of 103GW, and 40GW of PSP hydro projects are being planned by National Hydro Electric Power Corp. (NHPC), Tata Power, Adani Green Energy, JSW Neo Energy and Greenco. Four PSPs with aggregate installed capacity of 2,780MW are under construction as of December 2023. These include Tehri PSS in Uttarakhand (1,000MW), Kundah PSP in Tamilnadu (500MW), Pinnapuram in Andhra Pradesh (1,200MW) and Koyna Left Bank in Maharashtra (80MW). The first three are expected to be commissioned by FY25. Another 2,350MW in West Bengal and Andhra Pradesh have been concurred by the CEA and are yet to be taken up for construction. Further, 43 PSPs with aggregate installed capacity of 55.085GW are under survey.
More such innovations are on the way — for instance, Floating Solar Photovoltaics (FSPV) power plants, which gained momentum in the developed world since 2016, after the first FSPV was installed in Japan in 2007. FSPVs are solar panels floating on static water bodies such as lakes and large ponds. These are viable because of lower land acquisition and site preparation costs, and efficiency and higher generation due to temperature-regulating effects of water. So far, less than 3GW of FSPV has come up across the world. “India has an estimated potential of about 300GW of FSPV, but less than 350MW has been realised till date,” observes Auguste Tano Kouame, country director, India, World Bank, in a report titled Unlocking the Potential of Floating Solar Photovoltaics in India, released in October last year.
The first FSPV in India was set up by NTPC, a 100KW plant in Kayamkulam lake in Kerala in 2017. It has now been expanded by 92MW. NTPC Energy Technology Research Alliance (NETRA) had developed the floating platform for the pilot 100kWp plant, which was installed and commissioned by Tata Power. NTPC also set up a 25MW unit at Simhadri power plant, a 20MW unit at Auraiya, U.P. and a 100MW unit at Ramagundam, Telangana. A number of FSPV tenders have been floated by various agencies, including a 600MW plant in Omkareshwar dam in Madhya Pradesh by Rewa Ultra Mega Solar, of which the first phase of 280MW is under construction, according to the World Bank report.
A new study by the Indo-German Technical Cooperation on Innovative Solar (IN Solar) released in May says India has the potential to set up 207GW of floating solar, with Madhya Pradesh leading the way (40GW), followed by Maharashtra (32GW). The study estimates the government could install 30GW of cumulative floating solar capacity from 2024 to 2040 at a capital expenditure of ₹4.32 ($0.052)/kWh for 1MW of floating PV.
Micro-grids, Solar Pumps
The Energy Research Institute (TERI) estimates that the share of direct energy use in the form of electricity in India’s agriculture sector rose from 28.75% in FY10 to 37.1% by FY20. The need for more irrigated land, subsidies for diesel generation and power theft are major issues plaguing discoms. While diesel is used to run tractors and tube-wells, light diesel oil is used in pump sets. Mechanisation of agriculture is pushing up demand for diesel and electricity in the sector.
Under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahaabhiyan (PM-KUSUM) scheme, the government intends to provide energy and water security, de-dieselise the farm sector and also generate additional income for farmers by producing solar power. Extended till 2026, the scheme aims to add 30.8GW of solar capacity with Central financial support of over ₹34,000 crore. Plans are to have 10,000MW of decentralised grid-connected solar plants (with a capacity up to 2MW each), setting up of 20 lakh solar-powered agriculture pumps and solarisation of 15 lakh existing pumps.
According to the Ministry of Power, 166.28 MW (out of the sanctioned 4,766MW) has been achieved under the first component, 3,14,675 standalone pumps have been installed out of the sanctioned 12,94,787 sets, and 2,571 individual solar pumps and 9,207 Feeder Level Solar (FLS) pumps have been installed. In 2016, the draft national policy on mini-and microgrids envisaged setting up of at least 10,000 renewable micro and mini-grid projects across the country, with 500 MW of generation capacity developed by private players by 2022 to cater to around 237 million people experiencing energy shortage. Debajit Palit, professor of energy at NTPC School of Business, Noida, comments in a regulatory knowledge blog that so far 5,149 micro-grids have come up in the country. In 2024 alone, 18 micro-grid system tenders have been published, according to sources.
Rooftop solar is another area India is adding capacities fast. Mercom, which tracks global clean energy data, says India’s cumulative rooftop solar installations reached 10.5GW in 2023. There’s also a plan to promote biomass, biogas and waste-to-energy projects. The National Bioenergy Programme, launched by MNRE in November 2022, is being implemented from FY22 to FY26. The first phase has already been approved with a budget outlay of ₹858 crore.
Innovative renewable capacity additions are set to go a long way in meeting India’s sustainability goals.