Kochi: Two trillion USD – Rs 2 two lakh crore – a year: that’s how much investment is required to meet the global 2030 renewable energy target, as per a report published on February 13 by think-tank Climate Analytics. According to the report, the current renewable energy growth in Asia is primarily due to an increase in projects in India and China, but coal projects in both these countries are still a concern. Renewables in India, it predicts, will likely witness a 2.9-3.5 fold rise by 2030.
A few hours after this report was published, Prime Minister Narendra Modi announced a free solar electricity scheme for residential consumers. The Union government, he said in a series of posts on social media, will invest over Rs 75,000 crore in PM Surya Ghar: Muft Bijli Yojana, a project that encourages installation rooftop solar installations and aims to provide one crore households with up to 300 units of free electricity every month.
Till 2030, $12 trillion for renewables
Investing in renewable energy projects to decrease dependence on fossil fuels such as coal and gas is one of the main ways that countries attempt to cut down on excessive carbon emissions to decrease the rate of global warming and tackle climate change. Globally, almost one-third of our electricity comes from renewables, per latest statistics. Hydropower is the largest modern renewable source, but wind and solar power are also growing rapidly. Last year, at the biggest climate conference under the United Nations (COP28, held in Dubai, UAE, in November-December), one of the improvements that world leaders agreed on was a renewable energy target for 2030: tripling renewable energy capacity, and doubling energy efficiency improvements.
To achieve this, however, global renewable energy capacity has to grow to 11.5 terawatt (TW), or 3.4 times from levels as of 2022. And this can only be done if investments to the tune of $2 trillion a year are spent for this purpose, as per a report by think-tank Climate Analytics. However, the statistics from last year don’t inspire much hope: global investments in renewables and grid expansion only reached ~$1 trillion.
The report, published on February 13, says that a total of $8 trillion for investment in new renewables, and a separate $4 trillion for grid and storage infrastructure, will need to be added by 2030 to deliver COP28’s tripling goal.
The report calculated how fast different regions (Asia, Sub-Saharan Africa, the Organisation for Economic Co-operation and Development or OECD nations, Latin America and the Caribbean, Eurasia, the Middle East and North Africa or MENA) need to triple global renewables based on current capacities and future needs. The OECD countries (a set of 38 nations including the United States and United Kingdom) are not on track to meet the tripling goal: the report predicts that this group will fall around a third short of the target. For instance, renewable energy shows slow growth in Japan, where capacity will grow only 50% over the decade, per the report. In fact, over half of the global gap could be closed through 1.5-aligned action in the OECD alone.
Asia – currently home to renewable energy worth 1,630 gigawatts (GW) as of 2022 – is the only region on track to triple renewables in line with 1.5ºC because renewable capacity here could reach to around 5 to 5.7 terawatts (around 5-5,700 GW) by 2030 under current policies and measures, the report said.
Asia’s RE growth mainly due to India, China
“This is largely driven by the rate of renewables deployment in China and India, where forecasts show particularly strong growth in renewables under current policies,” the report said.
In fact, India and China account for 90% of total renewable capacity in Asia. So despite the poor performance of other Asian countries such as South Korea, both India’s and China’s strong growth rates “dominate and pull the whole region up towards the 1.5ºC compatible benchmark”, as per the report. The report also predicts that renewables will likely show a 2.9 to 3.5-fold rise in India from 2022 to 2030. And slightly higher in China: by 3.5-3.9 fold.
But Asia also has the largest pipeline for gas and coal-based power generation. “This vast building spree of fossil fuel infrastructure is in direct tension with the global commitment to triple renewables,” according to the report. Continuing to invest in fossil fuels will risk slowing the energy transition (from fossil fuels to renewable power) and the associated climate impacts, it added.
However, the construction “spree” of coal-fired power plants in China and India is a huge concern, as per the report. “If this continues, it will either jeopardise a 1.5ºC-aligned power sector transition, or create large-scale stranded assets,” the report has predicted.
India, for instance, continues to invest in coal-based power plants. MoneyControl reported that data from the Ministry of Coal showed that domestic coal-based power generation from April to October 2023 reached 686.7 billion units (BU), reflecting an 8.88% increase when compared to the previous year.
And there are plans for more: India will start operating new coal-fired power plants with a combined capacity of 13.9 gigawatts (GW) this year, its power ministry said in a statement to Reuters, on February 1 this year. This, as per the news report, will be the highest annual increase in at least six years. The ministry hopes to add at least 53.6 GW of coal-fired power capacity over the eight years ending March 2032, in addition to the 26.4 GW currently being constructed, the Ministry told Reuters. However, this bodes disaster from a renewable energy point of view; and we may not even need it, if renewable energy catches on at its current pace.
“With Asia’s [forecasted] strong growth in renewables capacity, new fossil fuel plants are not needed to meet electricity demand growth and should be avoided,” the Climate Analytics report recommended.
PM announces Har Ghar Bijli Yojana
On the same day that the report was published, Indian Prime Minister Narendra Modi announced, in a series of posts on social media, a scheme for free solar electricity “to further sustainable development and people’s wellbeing”, called the PM Surya Ghar: Muft Bijli Yojana.
The Union government, Modi said, will invest over Rs 75,000 crore into this free solar electricity scheme to encourage the installation of rooftop solar systems, and aims to light up one crore households by providing up to 300 units of free electricity every month.
“From substantive subsidies, which will be given directly to people’s bank accounts, to heavily concessional bank loans, the Central Government will ensure that there is no cost burden on the people,” Modi tweeted on X, formerly Twitter. “All stakeholders will be integrated to a National Online Portal which will further convenience.”
Per the scheme, residential households can avail subsidies of Rs 30,000 per kilowatt for rooftop solar installations of up to two kW; Rs 18,000 per kW for additional capacity of up to three kW; and the subsidy for systems larger than 3 kW will be capped at Rs 78,000.
To popularise this scheme at the grassroots, the government will incentivise urban local bodies and panchayats to promote rooftop solar systems in their jurisdictions, Modi said. The scheme would increase income, decrease power bills and generate employment, he added.
“Let’s boost solar power and sustainable progress. I urge all residential consumers, especially youngsters, to strengthen the PM – Surya Ghar: Muft Bijli Yojana by applying at- https://pmsuryaghar.gov.in,” he tweeted.
This scheme is the muft bijli (free electricity) project that finance minister Nirmala Sitharaman announced in her interim budget speech on February 1 this year. Sitharaman had said that the scheme can provide savings of up to Rs 15,000-18,000 annually for households, from free solar electricity and by selling the surplus to the distribution companies.
“Some broader level schemes of providing rooftop solar for 1 crore households with 300 units of free electricity and excess to be sold to discoms, are positive measures,” said Vibhuti Garg, director – South Asia, Institute for Energy Economics and Financial Analysis, while commenting on the budget speech on February 1 to Climate Trends, a research-based consulting and capacity building initiative. “However, net metering policies are not favourable in every state where consumers can gain from selling electricity back to the grid,” she said.
Net metering policies, which vary across states, are a billing mechanism that credits solar energy system owners for the electricity they add to the grid. India’s target is to install 40,000 megawatts MW (or 4 gigawatts GW) of rooftop solar power by 2026. According to one estimate, India has reached a total rooftop solar capacity of 12,762 MW (12.7 GW) as of the end of June 2023. Of this, residential rooftop solar only amounts to 2.7 GW.
