India’s Annual Solar Capacity Addition Needs To Increase Annually By 36% Till 2026-27 To Meet 14th NEP Targets

Relevance: Prelims - Environment, Renewable Energy Targets; GS3 - Infrastructure: Energy,

(Source: Down To Earth, 10/04/2023)

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Why in the news?

Recently, a report by global energy think tank Ember revealed that India must increase its current annual solar capacity addition by about 36% annually to achieve the 14th National Electricity Plan’s target of 185.6 GW by 2026-27.

What are the findings of the report?

• Expansion of solar capacity: India’s total national solar capacity is expected to rise to 66.7 GW after the commissioning of 12.9 GW in the current FY.
  • However, this is still not sufficient to fulfill the NEP’s target of 185.6 GW by FY 2026-27.
• RWE energy: Last year, India generated about 22% of its electricity, i.e. around 330 terawatt-hour (TWh) from renewable energy sources, including large hydropower.
  • If India continue to add renewable energy at the intended capacity, the share of renewable energy will double to 44% i.e. 1,180 TWh by 2032.
• Share of solar energy: The share of solar energy is expected to increase from 6.3% (102 TWh) in FY 2023 to 17% (339 TWh) in FY2027 and 25% (666 TWh) by FY2032.
  • Solar energy’s share of the energy portfolio rose from 5% in FY 2022 to 6.3% in 2023.
  • If the NEP14 targets are met, solar's share in the power mix is projected to grow from 6.3% in FY 2023 to 25% in FY 2032.
• Transition in Electricity Generation: There will be a significant transition from coal power-dominated generation to solar and wind energy generation.
• According to NEP14, India's total annual electricity generation will reach 1,174 TWh during 2022-32.
• Recommendation: India must commission a minimum of 17.5 gigawatts in FY 2024 and increase it up to 41 gigawatts by FY 2027 in order to meet the NEP targets.
• If India continues to commission solar capacity at this rate beyond FY 2027, it will surpass its target capacity of 365 GW by March 2032.

Challenges

• Grid flexibility and storage: The expansion of variable renewable energy (VRE) requires improved grid flexibility and storage solutions.
  • As solar and wind energy is likely to drive the growth in energy generation in the next decade, it is necessary to develop storage capacity.
  • This will help balance energy generation and demand.
• Challenges in VRE tenders: A major challenge faced by the energy sector is the under-subscription of tenders and reduced tender issue rates.
  • According to the Institute of Energy Economics and Financial Analysis, VRE tenders issued annually in India have dropped from 40 GW in 2019 to around 28 GW in 2022.
  • This is mainly due to the financial duress and the rising cost of solar modules.
• Rising solar tariffs: Solar tariffs in India rose from ₹1.99 per kWh in 2020 to ₹2.51 in Q1 2023.
  • This was attributed to supply-chain disruptions, GST rate hikes, insurance costs, and customs duties.
• Model and Manufacturer Restrictions: The reinstatement of the Approved List of Models and Manufacturers which is suspended untill March 2024 is expected to raise costs.
  • The List restricts participation in government-bid solar development projects only to specific indigenous models and manufacturers.

What is the National Electricity Plan?

• The NEP is a document that guides the development of the power sector in India.
• It is formulated by the Central Electricity Authority (CEA) every five years under the Electricity Act, 2003.
• It includes short-term (5-year) and long-term plans (15-year) to assess the demand for planning capacity addition and coordinate the activities of various planning agencies.
• Aim: Ensure the efficient and optimal utilization of resources in the power sector.
• Functions:
  • Periodic Assessment: It conducts periodic assessments, including a review of the preceding five years (2017-22), to assess the power sector's performance.
  • Capacity Planning: It formulates capacity addition requirements for the upcoming five-year period (2022-27) after considering the evolving demand and requirements for energy.
  • Long-Term Vision: It provides projections for the period from 2027 to 2032, and offers a strategic outlook for the power sector.

2022-27 NEP

• Additional coal-based capacity: It recognizes the need for an increase in coal-based capacity, with a projected range of 17 GW to nearly 28 GW, to be achieved by 2031-32 in addition to the existing 25 GW of coal-based capacity that is presently under construction.
• Investment in battery storage: It highlights the need for investments in battery storage.
  • Battery storage capacity must be increased from 51 GW to 84 GW by 2031-32.
• Plant load factor improvement: Enhance the Plant Load Factor (PLF) of coal-fired power plants by increasing the utilization rate 55% to 62% by 2031-32.
  • It also emphasizes on the need for greater operational efficiency.
• Renewables: It recognizes the need for careful and strategic management of the energy sector given the increasing reliance on renewable energy sources.

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FAQs

MCQs

Question: With reference to solar power production in India, consider the following statements

1. India is the third largest in the world in the manufacture of silicon wafers used in photovoltaic units.
2. The solar power tariffs are determined by the Solar Energy Corporation of India.

Which of the statements given above is/are correct? (UPSC CSE 2018)

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) None of the above