March 1, 2024

India’s clean energy boom slows as new solar projects are delayed. Experts say it can recover

BENGALURU, India – For years, renewable projects in India have been growing steadily, from rooftop solar installations in small towns to large-scale projects in the desert and long stretches of wind turbines and solar panels on farmland, all contributing to the country’s climate objective. transition to clean energy.

But a combination of political decisions, policies and supply chain issues meant that solar projects in 2023 were marked by delays and uncertainty, causing the country to fall short of its annual clean energy installation target in a year when records heat levels fell and devastating floods hit the country. Experts say this is a significant reduction in the country’s ambitions, but some are confident the shortfall can be made up this year.

A report by the Institute for Energy Economics and Financial Analysis found that the country installed just 13.7 gigawatts of clean energy last year, such as wind, solar and nuclear, compared to 16.3 gigawatts in 2022. India needs to install 40 gigawatts per year to meet its goal of installing 500 gigawatts of clean energy – enough to power 51 million homes in the country – by the end of the decade.

The shortfall “means that meeting the 2030 clean energy target is highly challenging,” said Charith Konda, part of the team that prepared the IEEFA analysis.

Solar module prices have fallen substantially around the world in recent years, but in India they have been subject to conflicting import tax policies, with the government first ordering high import taxes and then backtracking within a year. This has created a “wait and watch” attitude among solar project developers, said Vinay Pabba, chief operating officer of Hyderabad-based renewable energy company Vibrant Energy.

It takes up to two years for solar projects to come online after all agreements and documentation are finalized, he said, so “changing policies on shorter timelines than that creates a lot of uncertainty.”

Countless projects, big and small and in different states, have been hit with months-long delays as solar project developers put off placing new orders, said Gurpreet Singh Walia, a consultant for renewable energy projects in India.

Konda said incentives to encourage domestic production of solar modules rather than importing them from abroad conflict with the country’s goal of installing renewable energy quickly.

And since what was produced domestically in India was preferred by countries like the United States for their own energy transition over Chinese manufacturers, a huge increase in exports of solar power parts from India meant there was less supply available for local projects, analysts say.

Experts also say the country’s fossil fuel lobby has meant policies to encourage renewable growth have been insufficient.

“People in positions of power and decision-makers do not believe that renewable energy can provide steady power” because they are not convinced that batteries can store enough renewable energy to produce reliable, consistent electricity when the sun is not shining or the wind is not blowing. does not shine. it won’t explode, said Alexander Hogeveen Rutter, an independent energy analyst based in New Delhi. “When it comes to getting real power, coal is still considered the best option in India.”

This vision means that the country, the third largest emitter of greenhouse gases, continues to install new coal every year as demand for electricity increases due to development and population growth. More than 75% of India’s electricity is produced from burning coal, but the country plans to have 50% of its growing electricity needs come from renewable sources by the end of the decade.

But some analysts believe that most of these issues have already been resolved and that India can make up for the dearth of new projects this year.

There was a sharp increase in solar module imports late last year, suggesting that many of the delayed projects will be completed soon, said Vinay Rustagi, who tracks and analyzes the clean energy sector for financial research firm Crisil.

“We can expect a record in 2024 in this regard,” he said. But he warned that even if India recovers lost ground, “this kind of volatility is not good for the market as a whole. It undermines the ambitious goals that the government has set.”

Hogeveen Rutter added that a series of new tenders for renewable energy projects launched in 2023 is a positive sign that India will install much more clean energy in the coming years.

But even if the country makes up for last year’s slow growth, he warned that India’s renewable energy targets are just “arbitrary numbers, and not linked to the resource planning process.” Demand growth in India alone is enough to justify 50 to 55 gigawatts of clean energy additions annually, and that demand is expected to continue to rise unchecked in the coming decades.

Without more ambitious clean energy goals, the country’s renewable growth – however significant – will not reach its full potential, said Hogeveen Rutter.

“There are incredible entrepreneurs and innovators in both renewables and storage that are truly world class just waiting to be unleashed,” he said. “Once the targets are moved according to India’s demand, there is no doubt that India can become a clean energy powerhouse.”

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Associated Press data journalist Mary Katherine Wildeman contributed to this report from Hartford, Connecticut.

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Follow Sibi Arasu on X at @sibi123

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The Associated Press’ climate and environmental coverage receives financial support from several private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters, and funded coverage areas at AP.org.

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