A Wind-Mill
Non-Fossil Fuels News Commentary: October- November 2016
India
What will happen to India’s renewable energy targets now that a tectonic shift in climate policy is anticipated? Will they be trumped? These are the questions that ended a month filled with upbeat news from the renewable sector such as commitments for more dollars, more incentives and more support for solar power with some morsels thrown in for wind. Though there was uncertainty in these commitments materialising even before the tectonic shift, the level of uncertainty has increased since the election of a new President in the USA. India’s renewable energy targets for 2022 that were being described as aspirational or ambitious may now have to be described as fantasy.
In a recent report on renewables, the IEA has said that the share of renewables in India’s power generation would touch 19 percent in 2021 taking into account the 175 GW target for renewable capacity by 2022. The report revised its earlier estimates upward due to much higher capacity additions of solar PV which IEA expects to account for 50 percent of all new renewable capacity growth over the medium term. It expects onshore wind to expand by 25 GW over the medium term on account of ‘strong project pipeline, new supportive policies to encourage the repowering of old sites, and the announcement of wind auctions to develop 1 GW of capacity that should drive additional growth after 2018’. However the scaling back of accelerated depreciation benefit for wind from 80 percent to 40 percent, which will come into effect at the end of FY16 is expected to increase uncertainty in capacities materialising.
Hydropower capacity is expected to expand by over 10 GW driven by the government’s 5 GW small hydropower target by the end of the 12th Five-Year Plan in 2022. India’s agreement with Bhutan to co-develop over 2 GW of mostly large hydropower projects is also expected to contribute. The issue of targets for renewables depends on what is classified as renewables and in this context, the request from the MNRE to seek cabinet approval to reclassify large hydro power plants as renewable projects becomes important. This could potentially help India achieve clean power capacity of 230 GW by 2022 according to the Minister in charge of the MNRE. Until now only hydro projects that were less than 25 MW were classified as renewable.
According to a report by Bloomberg New Energy Finance, $10.5 billion was invested in renewables in India in FY16, which was 60 percent more than the investment last year. The investment required for meeting the target set for 2022 is estimated to be about $100 billion equivalent to almost 5 percent of all the goods and services produced annually by India according to Bloomberg.
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