Installation of new generating capacity for renewable energy in India has outpaced that of fossil fuels in recent years, making the country home to the fifth-largest supply of renewable energy in the world. In this context, India has set the ambitious target of generating 450 GW of renewable energy by 2030.

However, there remain several unaddressed issues, especially related to renewable energy (RE) generation, that need to be resolved. These include

• Procurement Issues: Solar and wind energy developers sign a contract with a power purchaser — mostly distribution companies (discoms) — for a prescribed period (typically 25 years) at a particular tariff rate per unit. The tariff is based on the capital cost, land costs as well as other operations and maintenance (O&M) costs for the supply of all the generated power. There have been instances when enticement of discoms to procure cheaper power from newer, large-scale solar and wind projects has left many old projects in a difficult situation. Cases of renegotiation have also been witnessed, leaving renewable energy projects vulnerable to damage, forced curtailment and payment delays.
• Deployment issues: Renewable energy deployment remains highly concentrated in a few resource-rich states. The share of solar and wind energy generation in renewable-rich states like Karnataka (29%), Rajasthan (20%), Tamil Nadu (18%) etc. is significantly higher than the national average of 8.2%. Further, some states do not meet their renewable purchase obligations (RPOs). Thus, the extent and adoption of renewable energy is not uniform in the country.
• Intermittency in generation: Fossil fuels like coal, which currently account for a majority of India’s power generating capacity, produce a stable and predictable stream of on-demand power. In contrast, power generation from solar and wind energy is more variable and unpredictable. As a result, grid operators may not be able to fully rely on these forms of variable energy as a means of sustenance. These challenges increase costs in the short-term and slow the build-out of renewable energy in the long-term.
• Issues related to governance: According to MNRE’s SARAL index, India is lagging in achieving its rooftop solar (RTS) power generation goal of 40 GW installation by 2022. This is because of administrative inconsistencies, inadequate financing, complexity of institutional frameworks, etc.
• Financial constraints of discoms: In December 2021, power discoms owed Rs. 101,436 crores to power generation firms according to the PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators) portal. The discoms have a precarious financial position due to massive Aggregate Technical and Commercial (AT&C) loss during transmission, absence of competition, unsustainable cross-subsidies, inefficient tariff-setting processes etc.
• Lack of trained professionals: There is a lack of skilled professionals to design, build, operate and maintain renewable energy plants in states. Further, there are not enough standards, procedures and guidelines in renewable energy in terms of durability, reliability, performance etc.

In this regard, power distribution companies and electrical grids must adopt the following reforms to mitigate their issues

• Regional interconnection and balancing: There should be increased coordination and trading between regions/states to increase the efficiency of energy flow across the network, improve economic efficiency of power procurement, and enable better integration of variable renewable generators. Further, the mechanism of tradable renewable energy certificates should be utilised.
• Advanced re-forecasting and skilling: More accurate renewable energy forecasts improve grid reliability and stability while allowing for a more cost-optimum economic dispatch of other generators in the fleet. Further, there should be skill training and capacity building of personnel.
• Decentralisation and grid modernisation:
  • Rooftop solar: Long-term integrated resource plans that identify specific deployment goals for RTS that can benefit with transmission and distribution (T&D) loss reduction, peak-load management and power-procurement optimisation.
  • Mini grids: Mini-grids are a sustainable and potentially cost-effective (lower T&D losses) solution, especially for remote rural areas.
  • Energy storage: Energy storage can play a major role in firming up the grid and enabling high penetration of renewable energy generation.
• Harnessing potential renewable energy: Renewable energy projects in areas with potential (such as harnessing hydropower energy in North-East India) should be implemented after conducting proper impact assessment and detailed studies on possible geological issues that might arise. Further, private players should be involved in order to raise capital for the projects.

The renewable energy sector can continue to grow significantly and play a key role in India’s ambition of tackling climate change. However, if not managed well, greater penetration of renewable energy can impact the technical and financial functioning of discoms. Thus, adequate measures should be taken to enable the power distribution companies and electrical grids to successfully transition from fossil fuels to renewable energy.