GREEN ENERGY AND GRID INTEGRATION - Potential and Economic Viability in India

As the costs of renewable technologies have come down, renewable markets are slowly evolving to become viable alternatives to the conventional energy. Governments across the world are reconsidering the economics of renewable energy and increasingly accommodating renewables into the complex equations of public policy. Shreya Shekhar, in this article, examines the renewable energy in countries that have been early movers in the market and then considers the Indian context to discuss potential and problems.

- Shreya Shekhar

The notion that ‘green’ energy would not be viable has not aged well. Increasingly, the consideration that it is too expensive to adopt, even for resource-constrained countries, is changing. As the costs of renewable technologies have come down, renewable markets are slowly evolving to become viable alternatives to the conventional energy. Governments across the world are reconsidering the economics of renewable energy (RE) and increasingly accommodating renewables into the complex equations of public policy, which require balancing developmental agendas, environmental considerations, resource constraints, and political economies.

Over the last few years, India has taken up increasingly ambitious targets for RE capacity and had a total RE capacity of 84 GW in 2019–20, with renewables alone contributing 23% of the total installed electricity capacity in the country in March 2020 (CEA), even excluding large hydropower projects, which are traditionally not counted in renewable capacity estimations.

However, despite the increasing excitement surrounding a sustainable energy transition, it is important to remember that renewable energy technologies are still relatively young, and the thus the nature of the technologies available, their challenges, and the policy frameworks put in place have been continuously evolving. In this article, we follow the story of renewable energy in countries that have been early movers in the market and then consider the Indian context to discuss potential and problems.

Economics of Renewable Energy

The RE markets in other countries have developed differently over the decades. In its nascent stages, policy around RE needed a high support and subsidy base, though that has changed significantly with increasing competitiveness.