India has been placed in the second spot in the renewable energy country attractiveness index by EY. The UK accountancy firm noted the fast pace of growth in Indian renewable energy in the past three years.

Over 10 gigawatt (Gw) of solar power was added between 2015 and 2017 and wind energy capacity grew to 5.4 Gw in 2017-18.

  1. This growth is in the context of the government’s ambitious targets — 175 Gw of renewables by 2022, with 40 per cent installed capacity from renewables by 2030 — and the dramatic price falls in photovoltaic technology. 
  2. In recent tenders, solar developers have offered to supply power at lower prices than newly built coal plants, effectively blocking new coal capacity.
  3. In an auction for a 500 megawatt (Mw) solar power park in Rajasthan bids spiralled down to Rs 2.62 per unit. Also, in the first-ever auction of a wind power project, the tariff fell to Rs 3.46 per unit.
  4. The falling bids coincide with financial and operational restructuring of state-owned power distribution companies. This will be a challenge for offtake from such low-bid renewable energy projects.
  5. The government should ensure that distribution companies have the capacity to continue to purchase renewable electricity, especially if bids level off or rise, EY pointed out. “The availability of capital remains a concern; the government could ease rules for tapping foreign debt.
  6. In the medium term, as renewable energy penetration increases, the government will also have to ensure the grid can manage intermittent renewable energy, especially around the evening peak when solar power availability falls away.