Renewables to grow fastest in India amidst continued dominance by thermal power, says GlobalData

GlobalData’s latest report, ‘India Power Market Outlook to 2030, Update 2018 – Market Trends, Regulations, and Competitive Landscape’, reveals that though installed non-hydro renewable power capacity and generation levels are expected to race ahead at high compound annual growth rates (CAGRs) of 12% and 13.2%, respectively during the forecast period (2018–2030), this will not be enough to dislodge thermal power’s dominance which is still expected to account for nearly half of the capacity mix in 2030.

Chiradeep Chatterjee, Power Industry Analyst at GlobalData, comments: “During the forecast period, the cumulative installed capacity is expected to grow at a CAGR of 5%. Nuclear power installed capacity is expected to show a greater growth rate than the historical period, at 9.7%, closely preceded by renewable power capacity at 12%. Thermal and hydropower capacities are expected to show growth rates of 2.1% and 3.4% respectively, during this period.”

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Non-hydro renewables are expected to contribute to nearly 40% of the installed capacity and a little over 14% of generation in 2030.

Thermal power will still be expected to contribute to around 48% of the installed capacity in 2030, with coal contributing to nearly 85% of the installed thermal capacity – similar to the scenario in 2017.

However, coal’s contribution to the total installed capacity is expected to decline from 57.9% in 2017 to around 40% in 2030, primarily due to an increase in contributions from wind, which is expected to increase from 8.6% to 14.9%, and solar PV whose share is expected to increase from 5.6% to 20.8% during the same period.

The high projections for wind and solar power particularly are attributed to the high potential for these energy sources in India, as well as the declining prices of raw materials, which are in turn leading to a dramatic fall in tariffs for these energy sources.

In 2016, the lowest tariff discovered in solar PV auctions was $0.065/kWh, which fell to as low as $0.038/kWh in 2017. In wind auctions, the first of which was held in February 2017, the lowest tariff value recorded was $0.051/kWh and this declined to $0.038/kWh in an auction held in September 2018.

Chatterjee concludes: “A significant challenge is the continuing absence of any autonomy for the transmission and distribution (T&D) sectors. Indian power distribution companies (discoms) are government-owned and function irrespective of commercial considerations, making the sector dependent on subsidies. Outages have become commonplace in many parts of the country.”