Surge in India’s Renewables Keep Coal’s Share Below 50% in Total Installed Capacity

Renewable energy accounted for 71.5% of the record 13,669 megawatts (MW) power generation capacity added by India in the first quarter (Jan-Mar) of this year (2024), while coal’s share (including lignite) of total power capacity dropped below 50% for the first time since the 1960s.

This is well ahead of the Government of India’s target to establish 50% cumulative power generation capacity from non-fossil fuel-based sources by 2030, according to the latest POWERup quarterly report from the Institute for Energy Economics and Financial Analysis (IEEFA).

The decline mirrors a global trend, with demand for coal in G7 countries plumbing record lows in 2023, levels not seen since 1900. To accelerate the transition, G7 countries last month vowed to phase out all unabated coal power generation by 2035, expanding on their commitment to end all construction of new coal-fired power plants.

As 2024 shapes as a pivotal year in the global transition away from fossil fuels, India is at the forefront, makes great strides towards the target of Net Zero greenhouse gas emissions.

Large-scale renewable energy projects have been the focus of intense interest, as evidenced by tender issuances crossing a record 69 gigawatts (GW), according to the report, Utility-scale renewable energy tendering trends in India, released this week by IEEFA and JMK Research. 

The tenders issued for utility-scale renewable energy projects in FY2024 far surpassed the government’s seemingly ambitious target of 50GW.

“After a slump from 2019 to 2022 due to supply-chain issues and global price spikes brought on by the COVID-19 pandemic and Russia’s invasion of Ukraine, the market has rebounded and gone from strength to strength,” says the report’s contributing author, Vibhuti Garg, Director – South Asia, IEEFA.  

“There is strong investor interest in the Indian utility-scale renewable energy market. The primary reasons are the large-scale potential for market growth, central government support in terms of targets and regulatory frameworks, and higher operating margins.”

Fastest-Growing Electricity Source

India has rocketed to third in the world’s solar power generation rankings, behind only China and the US, according to Ember’s fifth annual Global Electricity Review of 80 countries, released last week. Ranked ninth in 2015, India has now surpassed Japan, which, along with fellow G7 member Germany, has a stubbornly high demand for coal.

Solar was the world’s fastest-growing electricity source for the 19th straight year, adding more than twice as much new electricity as coal last year. India had the world’s fourth-largest increase in solar generation in 2023 (+18 teraWatt hours/TWh), behind China (+156TWh), the US (+33TWh) and Brazil (+22TWh). The top four countries accounted for three-quarters of solar growth in 2023.

Since 2000, the share of global electricity from renewables has expanded from 19% to more than 30%, driven by an increase in solar and wind from 0.2% in 2000 to a record 13.4% in 2023. As a result, the carbon dioxide intensity of global power generation reached a record low in 2023, 12% below the 2007 peak.

“A renewables-powered future is now becoming a reality,” said Aditya Lolla, Ember’s Asia programme director. “Solar power, in particular, is growing at an unprecedented pace.

“Our report concludes that the rapid growth in solar and wind has brought the world to a crucial turning point – likely this year – where fossil generation starts to decline at a global level.”

India, on the other hand, has been unable to shed its dependence on coal. Adverse weather conditions and surging power demand mean the country continues to rely on coal for over 70% of its electricity generation. The situation is unlikely to change this year, with the Central Electricity Authority expecting a shortfall in hydropower, leading to power shortages, especially during the night when solar is offline. As a result, media reports suggest the country may fire up idled coal plants to meet the shortfall.

On a more positive note, India’s push towards renewable energy has attracted a host of new players at state, national and international level. Of the record 69GW in tenders awarded in FY2024, only a quarter were from the Solar Energy Corporation of India (SECI), highlighting the important role that state-level authorities will play in the country’s utility-scale renewable energy landscape.

“Gujarat-based Gujarat Urja Vikas Nigam Limited (GUVNL) has already firmly established itself as one of the leading tendering entities in India. Similarly, the rising prominence of other state-level entities, such as Rajasthan-based Rajasthan Urja Vikas Nigam Limited (RUVNL), underlines the vibrancy of the renewable energy tendering ecosystem,” says the report’s co-author Prabhakar Sharma, senior consultant, JMK Research.

Growth in solar and wind pushed the world past 30% renewable electricity for the first time in 2023, Ember’s review found. India generated 5.8% of its electricity from solar in 2023, in line with the global average, which hit an all-time of 5.5% in 2023.

This year (CY2024), India has already posted a record solar power capacity installation of 8.5GW during the first quarter, driven by many projects coming online, including Adani’s 1.6GW solar project at Khavda in Gujarat.