Renewable Energy in India, 2017: A review

The year 2017 has been yet another landmark year for the Indian energy sector. At a national aggregate level India recorded net surplus energy for the first time. It also turned to be a net exporter of energy.  Renewable Energy capacity addition accounts for more than 50% of the total capacity added in this year.  Starting with national level policies, we had the Goods & Service Tax rollout in July. Although electricity supply has been kept out of the GST purview, its impact is felt considering the project development costs saw a price correction in the market. At a high level, there was a change at the ministry with R K Singh replacing Piyush Goyal as the Power Minister.

A comprehensive National Energy Policy was promised to be out by end of 2017 but we only had the release of draft version in June. The draft policy did receive critical feedback on how the supply and demand scenarios’ were forecasted running up to 2040. In a recent comment, the government has said the policy is close to being finalized.

The year in review was discussed in two parts on the Emerging Tech Radio, a podcast that I host. On the first part, Harsh Thacker joined the conversation.

Similarly, a draft policy on introduction of energy storage systems was proposed and again the industry is eagerly looking forward to the final version on that.

On the projects front, large scale project tenders was the order of the day. Wind power projects which for long has sustained on Feed in Tariffs at state level had to compete on a competitive tariff determined through reverse auctions. Solar tariffs first breached 3 rupee/unit mark in the bid for Rewa solar project in Feb and subsequently saw further bids stay below the mark. (Read more about solar bids)

Renewable Energy projects in India: A year-end discussion with Vish Iyer on the second part of the year-end review.

A big news that brought some cheer in the year was the release of the greening of grid report, a report that concluded that integration of 175GW of RE would be a possibility by 2022. The study was a collaboration between the Indian and US governments through the PACE-D programme. However, the analysis did leave some experts asking for details. For e.g. the report claimed energy storage wouldn’t have a great impact on grid integration and was not considered in planning. In return, grid balancing was mainly considered with hydro, gas and thermal power plants. The analysis expects the thermal power plants to operate below their current minimum requirement of 55% PLF.

The economic survey that precedes the union budget had valuable insights as expected. However, an interesting analysis came in the second part of the report released in the second half of the year. The Chief Economic Adviser in the chapter Climate Change Sustainable Development and Energy highlights the energy trajectory in India like projecting RE would account for a 43% of total grid capacity by 2027. The survey chapter also looks at the costs and benefits of different energy sources. Like for instance, looks at the record low solar tariffs and asks a question on whether there is an opportunity lost in land given for solar if they tend to under-perform etc. However, the report did leave some unanswered questions in terms of showing a low social cost for per unit of electricity from coal in comparison to renewables. (Read more about the analysis)

Forum of Regulators signed MoU with National Association of Regulatory Utility Commissioners (NARUC) the US body that represents the state public service commissioners. The MoU is part of the USAID’s PACE-D project, ‘Greening the Grid’. The partnership also aims to look at sharing experience in market design between the two countries.

So yes, there is optimism in the industry (ME INCLUDED). With a new minister at the helm, there have been some radical steps taken in the last few months which has created a new wave of enthusiasm in the sector. As Vish  mentioned in the podcast a few times (above), the RE industry now sees a transformative phase as India marches on towards an ambitious goal of 175GW of RE by 2022.

On a personal note, wrapping up five years of blogging on this platform (In case you missed my 5 year review as a clean-tech evangelist, here). More to come for sure. Just that it’ll also include integration of my audio blogging platform aka podcast.

The spike in power market prices

“Wind and solar power projects are powered by natural sources and hence their tariffs should be low”, is a general statement you would have heard often. In the last couple of years in India, the penetration of renewable energy has seen an increase and the spot market prices, the rates at which electricity is bought and sold in the commodity market has seen a constant decline.  The major sellers in the electricity market are Independent Power Producers including wind and solar developers who are not tied with contracts to public utilities to sell power and on the other hand a buyer can be any electrical consumer with a contract demand of generally over 1MW. Like in any general market dynamics, the price of electricity in the open market is determined by the supply-demand scenario. In the last few years owing to increase in development of power projects particularly wind and solar power plants the supply side of the market was strengthened. On the contrary demand growth has not been able to match the supply scenario and hence the spot electricity market prices were declining. If you have been closely tracking the updates from Indian Power Ministry’s ‘Vidyut Pravah’, an online platform that shows the instantaneous power availability and prices for every 15 min time block, you would have seen prices between INR 2-3/unit i.e. below 5 Cents/kWh. Since September 2017 India has managed to achieve ‘One Grid, One price‘ with the spot market price same throughout the country for every individual time blocks.

Yearly price

Daily average price (2016 vs. 2017)

Weekly prices

Average weekly prices (2016 vs. 2017)

The daily average price was in fact lower in the summer of 2017 compared to 2016 while the prices have just gone one way ever since. A closer look in the months of September and October 2017 will reveal the prices have doubled year on year. During a few 15 min time blocks the spot price has also touched INR 7/kWh.

In the last few months however, the market prices have scaled new highs. They have doubled on average for every 15 min time block with peak price nearly tripling from the average for the same time last year. Why is this happening in spite of India’s Renewable Energy deployment increasing faster than ever?

Listen to this episode from Emerging Tech Radio to find out the reasons in detail.

The reasons range from increased buying from DISCOMs in the spot market moving from long term contracts to lack of availability coal across power plants in the country.

The complete playlist of Emerging Tech Radio podcast.


National Energy Policy: India

NITI Aayog recently released the draft National Energy Policy (NEP) for public consultation. The NEP has been a work in progress for nearly 2 years. The NEP once finalized will replace the Integrated Energy Policy formulated by the erstwhile planning commission in 2008.

The objectives

  • Develop a long term road-map (up to 2040) to provide clarity to all concerned stakeholders.
  • Energy access at affordable prices
  • Improved energy security and independence
  • Promote sustainability
  • Foster economic growth

Considering the NEP is being drafted at a time when India’s ambitious energy targets for the short term are underway, it tries to unify the objectives of 175GW of Renewable Energy (RE) target by 2022, 24×7 Power for All for 2022 and 100 smart cities by 2022. The NEP also reigns in the objectives from India’s Nationally Determined Commitments (NDC) to the Paris climate deal (know more) of 33%-35% emissions intensity reduction by 2030 in comparison to 2005 levels and non-fossil fuel based energy capacity increase to 40% by 2030. Not to forget, the vision of 100% Electric Vehicle (EV) fleet by 2030.

Analysis and outcomes

NITI Aayog’s approach to the planning is noteworthy considering the use of energy modelling tool, India Energy Securities Scenario- 2047 where the supply and demand scenarios of Business As Usual (BAU) and NITI ambition for 2040 is simulated.


  • Gross Domestic Product (GDP) to grow at around 8% up to 2040.
  • Energy demand (across sectors) to grow from 4926 TWh (2012) to 13,192-15,820TWh by 2040.
  • Share of electricity in energy demand to be 23.2%-26.1% (2040) from 16% (2012).
  • Energy demand will increase 2.7-3.2 times by 2040.
  • Per capita electricity consumption to increase from 887kWh (2012) to 2,911-2,924kWh in 2040.
  • Installed coal based generation capacity to grow to 330-441GW by 2040 from 192GW in FY 17.
  • RE generation capacity to reach 597-710GW in the same period.
  • Nuclear power generation capacity expected to increase from the current capacity of 6.7GW to 22.48GW by 2030.
  • The RE capacity is expected to account 50%-56% of total capacity by 2040.

Key policy recommendations

NEP, as expected recommends a slew of policies for RE projects, fuel sourcing, air quality and energy technology and Human Resource Development (HRD).

  • Gradual withdrawal of ‘must-run’ status and other supports such as non-levy of inter-state transmission charges for RE projects.
  • Cross-subsidy bill should be equally shared between industrial clients and large domestic consumers in the short term and totally removed by 2040. (If reforms like UDAY are successful!)
  • EVs and energy storage are emerging technologies and should be suitably incentivised through time of use tariffs and related policies.
  • Accelerated Depreciation(AD) and Feed-in-Tariffs (FiT) are appropriate tools to drive RE growth in the near term.
  • Need to redefine the concept of ‘Electrification’ in electrification programmes like DDUGJY.
  • Coal will be phased out as declining energy storage costs is making variable RE viable.
  • Efficient use of Direct Benefit Transfer (DBT) to provide vulnerable consumers in the sector to foster ‘Equity’ and in turn sustainability.


Recommendations for meeting the ‘uncertainty’ and ‘variability’ challenges in RE integration:

  • Upgrade grid technology– System operators at Central and State level to undertake the process
  • Upgrade grid operation protocols– Update grid codes and shift scheduling & dispatch from 15min to 5min
  • Expand balancing areas– Move from state to regional level grid operations
  • Upgrade grid planning practices– Green Energy Corridors
  • Balancing resources-estimation, procurement, dispatch– Ancillary services regulations

Open points

Renewable Purchase Obligation (RPO)– NEP believes RPO will be one of the major drivers for RE in the short term but doesn’t provide a road-map to what happens when RPO ceases beyond 2020-22.

Regional inter-connection– RE being geography dependent will be concentrated only in about 8-10 states. Although this is acknowledged there is a lack of clarity on how regulations could drive inter-regional capacity transfers beyond the period when non-levy of inter-state transmission charges ceases.

Must-run status– One of the recommendations is to move away from classifying RE as ‘must-run’ but little thought is given to the current state of RE curtailment in spite of being ‘must-run’.

Electric Vehicles– NITI Aayog could have provided suitable recommendations to bring energy storage under the ambit of electricity act and proposed to permit energy resale to promote development of EV charging infrastructures.

Overall, the NEP draft is a good starting point backed by suitable analysis and modeling although it misses out on making a strong policy statement. Hopefully the missing gaps in policy recommendations and road-map are plugged in due course of stakeholder consultation.

The draft document: National Energy Policy