India Overtakes US, Ranked 2nd Best Country For Renewable Energy
May 18th, 2017
In a welcome development, India has been named the second-best country in this year’s Renewable Energy Country Attractiveness Index (RECAI).
China leads the list, with India rising from third to second place this year. The United States fell to third place due to the policies of the Trump administration.
The list of 40 countries indicates that economically viable renewable energy alternatives coupled with security of supply concerns are encouraging more countries to support a clean energy future. Kazakhstan (37), Panama (38), and the Dominican Republic (39) have all entered the index for the first time, with more countries embracing clean energy and the world taking action against climate change.
The entire report can be read here.
The Renewable Energy Country Attractiveness Index is released annually by EY. The Index analyses the factors driving market attractiveness in a world where renewable energy has gone beyond decarbonisation and reliance on subsidies.
The Index analyses a country’s performance based on the following parameters/questions:
- Is there a long-term need for additional or replacement energy supply? If so, is there a strong case for energy from renewable resources in particular?
- Is policy hindering or helping the ability to exploit renewables opportunities in a country?
- Are essential components in place to ensure project delivery, such as long-term contracts, grid infrastructure and availability of finance?
- What does the strength of natural resource, track record and project pipeline reveal about the outlook for particular renewable technologies?
- Even if all other boxes are ticked, does the macro stability and investment climate enable or impede the ease of doing business in a country
RECAI on India’s performance
According to the EY report, a “combination of strong government support and increasingly attractive economics” has helped to push India into the second place. This follows recent dramatic growth in renewables, with more than 10GW of solar capacity added in three years — from a low base of just 2.6GW in 2014 — and record new wind capacity installed in 2016.
This growth is in the context of the government’s ambitious targets — 175GW of renewables by 2022, with 40% installed capacity from renewables by 2030 — and the dramatic price falls in solar technology in particular. In recent tenders, solar developers have offered to supply power at lower prices than new-build coal plants, effectively blocking new coal capacity.
India’s 2022 target, set by Prime Minister Narendra Modi in 2014, includes 100GW of solar, 60GW ground mounted and 40GW rooftop. Wind is expected to deliver 60GW, with biomass and small hydro accounting for the remaining 15GW. In the 2016–17 financial year, India added 12.5GW of renewable energy capacity, compared with 10.2GW from conventional sources.
The 40GW rooftop target is looking challenging, with only around 1GW of rooftop capacity added so far. Developers have proved cautious about the credit risk involved in contracting with residential customers, while incumbent utilities have stalled, reluctant to lose valuable clients to insurgent solar companies.
In the wind sector, a lack of transmission capacity between areas of high wind resource and load centers has created bottlenecks in the past — although bid prices for wind have also been falling. According to EY, the government will have to turn its attention to the ability of India’s grid to manage intermittent renewables. More wind auctions are now expected to drive prices down further.
In the last financial year, wind beat its target, installing 5.4GW compared with the target of 4GW. However, despite impressive growth of 6.8GW in 2016, solar is lagging its target of 12GW (7GW of utility-scale and 5GW of rooftop solar), showing just how ambitious the Government’s goals are. The Government’s additional emphasis on PV parks will help to plug the gap, but it needs to do more to encourage rooftop solar installations.
Meanwhile, India’s regulators must be mindful of the erosion of electricity market peaks caused by growing volumes of renewables and storage — this can undermine the economics of thermal power plants, risking the stability of the system as a whole.
The Government faces several other challenges in meeting its 175GW target. Issues around land rights — for renewable energy systems or transmission lines — are slowing development. In February, the Government increased the proportion of solar capacity it expects to build in largescale solar parks to 40GW from 20GW. These parks, where the government secures land rights and transmission capacity, have proved attractive to developers and investors.
The Logical Indian take
The Logical Indian community applauds the government’s efforts to make India a renewable energy superpower. Recent trends are very encouraging in India’s mission to adopt clean energy and set an example when it comes to climate action. With some of the world’s biggest polluters like the United States not doing enough to combat climate change, the need of the hour is for countries like India to lead the way to a clean and green future.