India's Power Sector Evolution
India's power sector has historically faced challenges of scarcity and affordability, despite ambitious reforms. Currently, India adds 40 GW of renewable capacity annually, surpassing many developed nations in scale and cost efficiency. The challenge is now organizing markets, institutions, and demand to optimize this capacity.
Absorption Challenges
- Nearly 42 GW of renewable capacity awarded through auctions has yet to find buyers.
- Distribution companies exhibit caution toward additional clean energy commitments.
Structural Shifts Enabling Expansion
- Falling Clean-Energy Prices: Recent reverse auctions show solar power with storage at around Rs 3 per unit, stable for 12 to 25 years.
- Institutional Reforms: Open access and captive procurement enable large consumers to purchase power nationwide, driving a quarter of India's renewable capacity addition.
Sources of New Demand
- Manufacturing clusters, export industries, and data centers can leverage open access or captive routes for clean electricity, enhancing competitiveness and attracting FDI.
- Process heat in industries can shift from imported oil and gas to clean electricity via electric heat pumps and high-temperature heat batteries.
- Fertilizer and steel sectors can adopt green ammonia and green steel production using clean electricity.
- Electrification of buses, fleets, and freight corridors can align with daytime solar output, increasing demand when clean power is abundant.
- Distributed rooftop solar reduces bills, peak demand, and subsidy burdens, while improving resilience.
Facilitating Clean Energy Adoption
- Aggregating and securitizing long-term clean-energy contracts through finance platforms can expedite transition for large buyers.
- Smaller consumers require fintech solutions to minimize transaction friction.
Addressing Component Dependency
- India relies on imported batteries, but can reduce this dependency with scale, policy certainty, and partnerships for critical minerals.
India's robust domestic demand can drive its energy transition, supporting the journey to Viksit Bharat. This shift towards cheaper, cleaner power defines the future of India's energy landscape.
