Renewable energy contributes to about 6% of the country’s energy production, but comprises almost 13% of the installed capacity, or about 32 gigawatts.
Under an ambitious new agenda, the Indian government recently outlined an integrated plan for desert power development that will see the installed capacity from renewable energy target 455GW, a whopping 35% share by 2050.
An action plan to scale-up solar power generation capacity to 10,000 megawatts is likely to be released by next week, which could include potential tie-ups with foreign firms as well as possible funding models including viability gap funding guarantees from the government.
The new government’s commitment to renewable energy is evident as both conventional fuel and renewables have been banded together in a broad energy portfolio under a single minister for the first time in four successive governments.
Previous separation of portfolios had ministries pitted against each other, with mismatched policy objectives and often competing for budgetary allocation.
Also, the country will be hosting the first of an annual series of forums for renewable energy next February, with the aim of attracting investments to reach an annual renewable energy installation target of 900MW.
As part of the new renewable goal, the energy ministry has already set aside $US90 million for four mega solar projects including what could become the world’s largest solar plant.
The first of these will be set up in the western state of Rajasthan and will have a total installed capacity of 4,000 MW, with the first phase of 1,000MW to be commissioned in 2016.
The sector has secured a commitment from the World Bank for a $US775 million funding for renewables, which is further bolstered by private sector investment.
Spanish wind power giant Gamesa is set to invest $US127 million over the next five years.
While the company is eying favorable investment terms, with the government recently lifting import tariff on renewable energy components, it is also looking to diversify into solar energy.
India’s renewable sector is also attracting investment from some rather unexpected quarters.
Coal India will be developing a 1000MW solar power plant at an estimated cost of $US1.2 billion, possibly to offset its carbon footprint.
India’s National Aluminium Company is also looking to setup a 100MW wind energy plant for an investment of $US110 million.
NALCO is one of the world’s largest aluminum producers and operates one of the biggest captive power plants in India, with a capacity of 1,200MW.
Interestingly, NALCO was one of the winning bidders of a coal lease that was revoked by the recent Supreme Court ruling.
But what may have been a black day for local coal proponents in the country has certainly been a boon for the renewable sector.