Despite Progress Renewables Unlikely To Replace Coal in India Anytime Soon

India has ambitious plans and targets for its renewables sector in its growing push for low-carbon power and the country has enacted several supportive schemes and policies for the renewable energy sector.

This includes the budget announcement of US$4.3bn for the green transition and energy security, the National Green Hydrogen Mission with an outlay of US$2.4bn, and amendments to its energy policies to allow the government to mandate non-fossil fuel power use.

There are also schemes to spur domestic renewable equipment manufacturing in India, such as production-linked incentives (PLIs) for the solar and wind sectors, to supply its low-carbon energy transition.

According to a new commentary published by BMI, a Fitch Solutions Company, India’s PLI schemes have been largely successful. BMI highlights that in March 2023, about 39GW of domestic solar PV module manufacturing capacity was allocated under the PLI schemes.

According to the Indian government, it expects 7.4GW of this capacity to come online by October 2024, 16.8GW by April 2025, and 15.4GW by April 2026.

BMI believes that this will result in a growing number of opportunities for companies involved throughout the entire renewables supply chain. Examples include renewable equipment manufacturers, renewable power project developers, and companies looking to offtake renewable electricity for the coming years.

Low-Carbon Alternatives

However, according to BMI, coal will remain the market’s dominant power type over the coming 10 years at about 70% of the power mix, as the growth of its coal power sector has shown little signs of slowing and coal will continue to be India’s source for affordable and round-the-clock (RTC) electricity.

While renewables are at about cost parity in the majority of markets globally, India has yet to scale technologies to mitigate the challenges with a growing intermittent renewable electricity supply, BMI says.

These technologies include battery energy storage systems, which India has yet to commission on a large scale.

Apart from renewables, nuclear also has the potential to serve as a low-carbon alternative to coal, but as BMI points out the technology is capital-intensive and technically complex, which has hampered its growth in India. As a result, BMI expects that coal will continue to be the market’s main power type to fuel its robust economic growth over the coming decade.