India’s renewables industry under pressure to fulfil government’s target

News Desk
Sunday, Apr 09, 2023

New Delhi: India’s plans for a sharp increase in renewable capacity auctions will put “a lot of pressure” on the industry to scale up quickly, the head of one of the largest clean energy providers has said.

India will start auctioning 50 gigawatts of solar and wind power capacity for the country’s electricity grid annually until 2028, more than doubling the current pace.

Sumant Sinha, chief executive of ReNew, welcomed the proposal outlined by India’s renewable energy ministry. But he noted that renewable companies were already stretched trying to keep up with existing work.

More bidding will “put a lot of pressure on people like us because we need to raise capital, we need to have equipment, we need to be able to execute on the ground, we need to hire people”, he told the Financial Times in an interview. “All of that is not easy.”

The planned increase comes as India races to meet its target of installing 500 gigawatts of clean energy capacity by 2030, in order to meet 50 percent of the country’s electricity needs from renewable sources.

“This is step one in terms of trying to make the seriousness of their 500GW target more credible and more real,” Sinha said. “It can be done but we’ll need a little time to ramp up.”

ReNew has commissioned about 8GW of capacity and committed to building nearly 6GW more over the next two years. “Market opportunity is not a problem,” Sinha said. “It has always been an issue of how much we can execute, rather than anything else.”

India still sources most of its power from coal and other fossil fuels, and the International Energy Agency estimates that energy demand in the country will be among the world’s fastest-growing until 2030.

While Prime Minister Narendra Modi’s government wants clean energy sources to meet much of this demand, the country has so far struggled to keep up with its goals and fell short of a plan to install 175GW by last year.

A memo from the renewable energy ministry said the government planned to auction at least 15GW by June this year, followed by 10GW to 15GW for the remaining quarters of the year. “It’s a pretty short-term target, so therefore we’ll have a pretty good sense of whether they’re heading in the right direction or not,” Sinha said.

ReNew is expanding into other areas and last week secured government subsidies worth about $180mn as part of a programme to promote domestic manufacturing of solar cells, wafers and modules.

Other companies investing billions in renewable power alongside ReNew include Tata Power and Adani Green, part of the Adani Group conglomerate.

Adani says it wants to reach 25GW by 2025. But the group’s expansion plans have come under pressure after fraud allegations by US short seller Hindenburg Research earlier this year triggered a market rout that wiped as much as $145 billion off the value of its listed companies, which includes Adani Green. Adani strongly denies the allegations.

While Adani said it was committed to aggressive investment in renewables and other areas, some analysts have questioned its ability to keep up.

Sinha said India would struggle to maintain its pace of renewables growth without Adani.

“Just looking at it purely from a capacity addition standpoint, they are one of the larger players, with significant plans to add more capacity,” he said. “If that gets set back, then for sure it’s going to impact capacity addition in the country as a whole.”