India’s Policy Framework For Low-Carbon Electricity Generation

India recently submitted its Long-term Low-Carbon Development strategy to the requirements of the Paris Agreement. The South Asian country aims to go carbon-neutral by 2070, requiring adopting new technological developments while taking care of all the associated risks. For this, the Policy framework that the country adopts will matter the most in its transition to low carbon emission efforts.

Current Stats

With a peak demand of about 206 GW and a total electricity generation for FY 2021-22 of under 1,500 TWh/BU India has one of the largest power systems in the world. The industrial sector of the country had the lion’s share in total electricity consumption – 43 per cent of the total. It was followed by the residential sector (24%) and the agriculture sector (18%).

India has also enforced its clean electricity generation capacity, producing about 168 GW (41.6%) from non-fossil fuels out of its total installed generation capacity of 404 GW, as of July 2022. In the FY 2021-22, renewable energy (RE) accounted for 22 per cent of the total, including hydro.

India underwent impressive growth in renewables since 2015, most of it coming from solar and wind. Renewables grew from 39 GW in 2015 to a high of over 110 GW by 2022, clocking a CAGR of about 15.6 per cent.

India’s average per capita electricity consumption from utilities alone, about 800 kWh in 2020, was only about a fourth of the global average. On the path to a zero, or at least low, carbon future, India has been proactively shutting down inefficient thermal power units. A total of 241 Units, with a capacity of 17,281 MW, have been retired from the 10th Plan period onwards till September 2021.

Despite one of the lowest overall per capita consumption of electricity (1,255 kWh for the year 2021-22), India has taken into consideration low-carbon electricity for any future expansions.

Policies and Programs Toward Low-Carbon Electricity

The Government of India launched National Action Plan on Climate Change (NAPCC) on June 30, 2008. The plan outlined eight National Missions on climate change – Solar Mission, Mission for Enhanced Energy Efficiency, Mission on Sustainable Habitat, Mission for Sustaining the Himalayan Eco-system, Mission for a Green India, Mission for Sustainable Agriculture, and Mission on Strategic Knowledge for Climate Change.

Since that significant step toward green development, India’s policy framework for growth in electricity generation and supply along a low-carbon development pathway has evolved comprehensively. Various programs and policies have formed a bridge for the country in realising its low-carbon potential. These are broadly defined into three categories.

After building on some of the most ambitious Renewable energy measures over the years, India progressed at an impressive rate. Last year, the country set a target of installing non-fossil energy capacity to 500 GW by 2030.

‘Must-run’ Priority Dispatch Status

‘Must-run’ priority dispatch status has also been given for renewables. ‘Must run status’ mainly means that evacuation of power from Renewable sources should not be curtailed for factors other than on account of grid safety or safety of equipment or personnel. Preference is given to RE power in the merit order despatch, despite costs, which is part of India’s investment in mitigation, through increased cost of power, especially for supply from older sources.

Renewable Purchase Obligations

Another instrument is Renewable Purchase Obligations (RPO). RPOs are obligations for the purchase of RE power. RPO mandates that all electricity distribution licensees should purchase or produce a minimum specified quantity of their requirements from Renewable Energy Sources. This is as per the Indian Electricity Act 2003.

The State Electricity Regulatory Commissions fix the minimum RPO for the State. For instance, The Kerala State Electricity Regulatory Commission (KSERC) notified a total RPO of 3 per cent in 2010. Of this, 2.75 per cent is to be met from non-solar sources and 0.25 per cent from solar energy. The RPO increases by 10 per cent of 3 per cent every year, up to a maximum of 10 per cent.

Promotion of Hydro Power

Several policy measures to tap hydropower potential in the country like Hydro Purchase Obligation have been taken. This in turn also necessitates an increase in climate finance.

Energy Storage Obligations

ESOs are also being introduced. The ESO specifies that the percentage of total energy consumed from solar and/or wind, with or through energy storage should be set at 1 per cent in the 2023-2024 timeframe and gradually rise to 4% by 2029-2030.

Green Energy Corridors

The Government of India approved the Green Energy Corridor – Intra-State Transmission System Phase-II scheme on January 6, 2022. The transmission infrastructure under the scheme will be set up in the country’s RE-rich states.

Solar Park Development

The scheme, Development of Solar Parks and Ultra Mega Solar Power Projects, was launched in December 2014 to help solar project developers set up projects in a plug-and-play model. The Ministry of New and Renewable Energy (MNRE) provides central financial assistance (CFA) of up to ₹20 lakh per MW or 30 per cent of the project cost, including grid-connectivity cost, whichever is lower. The solar parks are developed in partnerships with state governments and their agencies, CPSUs, and private entrepreneurs.

Rise in Nuclear Capacity in this Decade

Nuclear energy may play a pivotal role in meeting India’s low-carbon electricity goals. India plans to produce 22,480 MW of nuclear power – over three times its current producing capacity of 6,780 MW – by 2031.

Production-Linked Incentives

The PLI has been a very important policy for the growth of the Indian renewable sector. PLIs are being given for solar, electric vehicles and battery storage systems. Under the PLI scheme, Rs 19,500 crore was set aside to incentivise the manufacturing of domestic solar cell modules. Similarly, others are also covered under PLI.

Renewable Energy Management Centre

REMCs have been established for the supervision, monitoring and control of RE. They are equipped with Artificial Intelligence-based Renewable Energy (RE) forecasting and scheduling tools to provide greater visualization and enhanced situational awareness to the grid operators.

Waste to Energy Measures

India introduced Programme on Energy from Urban, Industrial, Agricultural Wastes/Residues and Municipal Solid Waste. The objective of the programme is to support the setting up of Waste to Energy projects for the generation of Biogas/ BioCNG/ Power/ producer or syngas from urban, industrial and agricultural wastes/residues. It is valid through FY 2021-22 up to FY 2025-26.

Green Hydrogen Mission

Prime Minister launched the National Hydrogen Mission on the country’s 75th Independence Day. The mission aims to aid the government in meeting its climate targets and making India a green hydrogen hub. This will help in meeting the target of production of 5 million tonnes of Green hydrogen by 2030.

Others

Other policy measures are also taken by the government to generate low-carbon electricity, such as bundling thermal and hydropower with RE to enhance flexibility, biomass for power generation, supporting R&D in Carbon Capture and Utilisation, and Developing or deploying storage systems, such as Pumped Storage Plants, Battery Energy Storage Systems, Gravity, Thermal, Compressed Air, etc.