India’s Energy Transition: Trends and Challenges

By- Praveen Raju, Janhavi Joshi, and Amoolya Khurana, Spice Route Legal.

India presented its plan to combat climate change at COP26 in the form of Panchamrit, a five- pronged approach to achieve its commitments towards climate change and to advance energy transition. At COP26, India also announced its commitment to meet 50% of its energy requirement from renewable energy by 2030 and achieve net zero emissions by 2070. As a part of these efforts, the Government of India organised the India Energy Week, 2024, an energy exhibition and conference on the theme of energy transition, to mobilize the entire energy value chain and catalyse the country’s energy transition goals. As countries around the world push for climate neutrality, the issue of energy transition is gaining traction at Indian and global fora, such as the World Sustainable Energy Days at Wels this year which aims to exhibit high policy ambitions and plans to strengthen clean energy markets through six conferences dedicated to specific areas of the energy transition.

India’s energy transition story shows great promise as demonstrated by our current energy mix where 40% of the total installed capacity comes from renewable sources of energy. This aligns with the timelines promised at COP26 and overachieves the commitments made at COP21 by India. In the last five years, India has exponentially grown its installed capacity for solar (17.2%), wind (10.46%) and hydro (10.91%) and the Government aims to diversify this energy mix further. The Government is also working on finalising procedures to pool tariffs of renewable energy capacities and make electricity tariffs uniform across the country to further promote the sector and encourage project development.

Along with our focus on renewable energy, we are also incentivizing other areas such as green hydrogen and biomass. Green hydrogen has become the new thrust area for the Government with the introduction of the National Green Hydrogen Mission to boost the production, usage, and export of green hydrogen and its derivates. Under the mission, India has already seen multiple central bids with sizeable participation, introduction of state-specific policies with incentives, and active participation from public sector undertakings such as GAIL and NTPC that have set up projects in Indore, Surat and Leh and are currently blending 2-8% of hydrogen by volume into existing natural gas pipelines. Among other notable efforts, the Government has notified the Carbon Credit Trading Scheme with the objective of developing a domestic carbon market and a National Policy on Biofuels to set ambitious targets for ethanol blending for use in the transport sector. Energy is also considered a thrust sector for our budget as exemplified by the incentives in the Interim Budget,  including the Pradhanmantri Suryodaya Yojana that will enable 10 million households to obtain up to 300 units of free electricity every month, and increased financial estimates for the National Green Hydrogen Mission and the Green Energy Corridor.

While India continues to be a leading voice for energy transition, our energy demands face a unique problem – the demand for and dependence on power generated by thermal plants continues to increase and is expected to peak in the coming decade. This creates a practical need to balance the consistent replacement of coal from the energy mix, on one hand and meeting increasing energy demands efficiently, on the other hand. Since existing thermal power plants are plagued with irregular power supply and power outages, a good first step would be to ensure that sufficient capabilities are developed to meet the electricity demand in the short and medium term. This could include boosting our fuel supply agreements, augmenting, and upgrading our distribution and transmission infrastructure and promoting advanced demand side management. As a next step, India should ramp up the development of hybrid and battery storage systems to support intermittent sources of power such as solar and wind. If things proceed as expected, existing thermal power plants should be able to maintain a steady output of electricity and effectively adapt to fluctuations in supply, while renewable energy sources should be able to make a substantial contribution to meeting the country’s energy demands.

As professionals in the energy sector, we encourage laws and regulations that transcend generations and create a long-term impact on how we consume energy. We believe that India has shown incredible potential as a leader on climate change in the developing world, and we look forward to contributing to the growth of the energy sector in India. To this end, it is imperative that our policies are practical and economically viable and that our promise of efficient electricity supply to all is not hampered in our quest for a greener future.