What does India’s INDC imply for the Future of Indian Electricity?

by Radhika Khosla and Navroz K. Dubash

India’s INDC lays out a 2030 target to achieve about 40% cumulative electric installed capacity from fossil fuel free (FFF) energy resources, with the help of technology transfer and low cost international finance. Accompanying this is a domestic goal to achieve 175 GW of renewable energy (RE) by 2022. In this blog, we seek to clarify and understand the implications of these targets for India’s electricity and renewables future. We discuss five issues:

  • RE in 2030: The 40% FFF target translates to a RE capacity addition of 150-276 GW, of which the higher end is based on more realistic nuclear assumptions than are contained in the INDC.
  • Impact of 175 GW target: If India meets the 2022 RE target it will likely overachieve the 2030 FFF target, but this will require frontloading renewables expansion in the next 7 years.
  • Translating to generation terms:  Understanding the target in generation terms is important. Under the 2030 FFF pledge, RE share will account for 28-31% of grid capacity, and at least 13-14% of electricity generation. These projections are highly sensitive to capacity utilization factors (CUF), and the estimates are based on assumptions that give the lower bound – future RE shares of generation could be a few percentage points higher.
  • Implications for 2030 fossil fuels: Even with large RE capacity addition, fossil fuel based generation in 2030 is likely to stay substantial, up to as much as 79% of actual generation (less in capacity terms).
  • Implications for 2030 emissions: The projected 2030 RE share will displace at least about 5% of India’s total greenhouse gas emissions, suggesting continued attention to other sectors of the economy. However, in absolute emission terms, the resultant emissions reduced is on the same order of magnitude as South Africa’s entire pledged 2030 emissions.

Range of Possible 2030 Renewable Numbers

How the FFF target is met in 2030 will depend on assumptions about the growth of nuclear and hydro power, and the increase in size of the total electricity sector over the next fifteen years. We examine the implications of varying these FFF components.

Of these parameters, the specific projection made in the INDC is 2499 TWh of total electricity demand in 2030, which translates to 2940 TWh of total electricity generation, assuming 15% T&D loses.[i] To assess what this means for the FFF target this number needs to be converted to capacity terms.

But converting generation (in TWh) to installed capacity (in GW) is not straightforward. The characteristics of the grid in 2030 will evolve in unpredictable ways as the generation mix changes (in particular as RE grows) and technologies mature. Given this uncertainty, in this note, we adopt the approach of using empirical capacity utilization factors (CUF) and argue for what we see as likely deviations from current trends in the future.

The subsequent results for India’s 2030 electricity capacity mix are in Table 1.

As Table 1 shows, if India was to strictly follow its INDC assumptions, the RE required in 2030 to achieve the 40% FFF target would be relatively low, from 114-168 GW. This would be driven in large part by the INDC’s highly improbable nuclear estimates of adding up to 63 GW of nuclear energy from a current base of about 6 GW.[ii] Nuclear growth rates over the last decade were low, the fuel faces continued political and other obstacles to its expansion, and other sources are growing in their cost competitiveness, such as coal and RE.

The INDC based estimate appears problematic on two counts. First, the installed capacity that results from the INDC generation numbers is well below independent assumptions of 2030 installed capacity.[iii] Second, the nuclear projections appear unrealistically high, given that India has only added 2 GW of nuclear capacity in the last decade, according to the Central Electricity Authority (CEA) data.

Consequently, we do a second assessment, using a range for nuclear drawn from the India Energy Security Scenarios of Niti Aayog [iv], and a range of installed capacities from 700-900 GW (Table 2). Hydro and biomass assumptions are the same as those described above (see Table 1 notes). The shaded columns in Table 2 reflect what we consider the more likely future scenario, based on relatively low nuclear growth to 17 GW by 2030. The rest of the calculations in this note use this low nuclear range.

The results show that to meet the 40% FFF target, the renewable requirements in 2030 range anywhere from 150-276 GW — a difference of almost a factor of 2. In our view, the higher end of this range 196-276 GW, corresponding to a low nuclear scenario, is the most salient. This high end amounts to adding almost the entire size of India’s current capacity (278 GW)[vi] only in RE over 15 years, a substantial task. Moreover, the numbers suggest India will make a substantial addition to global RE demand (perhaps second to China) in the next 15 years. By way of context, by some estimates, the US may add between 50-250 GW of solar and wind by 2040[vii] while China is estimated to add about 630 GW of RE.[viii]

175 GW Target: A Confounding Factor?

The inclusion of the short term (2022) domestic target of 175 GW of RE, albeit not part of the formal INDC but in the section on reporting progress, make the implications for India’s electricity more complicated. If 175 GW RE is fulfilled by 2022, India will likely considerably overachieve the long-term FFF target, making the latter somewhat redundant. In fact, going strictly by projections stated in the INDC (Table 1), India can meet its FFF goal by achieving even less than the 175 GW in 2022.

If India goes strictly by both the 2022 and 2030 targets, the FFF trajectory to 2030 from the current FFF share of 30%[ix] will not be smooth. Instead, it will require RE expansion to be front-loaded, setting a high bar in the next seven years when RE costs are likely to be relatively higher and conditions for RE absorption into the grid less conducive. Figure 1 demonstrates two possible trajectories to the FFF goal in 2030, one via the 2022 target and one without achieving the 2022 target. The whiskers at the end of the 2030 bar indicate the projected RE numbers for high (900 GW) and low (700 GW) grid capacity. As mentioned earlier, a third trajectory would be an overshoot of the 2030 target.

Figure 1: Possible FFF trajectories to the 40% FFF target in 2030 [x]

Fig 1 for post 2

To put it differently, to get to the 2022 target, renewables would have to grow at an ambitious 27% between 2015 and 2022. However, the required RE growth rate falls to a more modest 13-15% (for 2015-2030) if instead the target is framed for 2030 in FFF terms. From a planning perspective, it would be helpful for the government to clarify whether the aspiration is to aim for 175 GW in 2022, implicitly allowing for overshooting the 2030 FFF target, or whether the 2030 target is the operational one, allowing for a more gradual build-up of RE.

What does the RE share imply in Generation terms?

Since RE operates at a lower capacity utilization factor than conventional power, understanding the actual implications of the INDC targets require exploring how much electricity generation comes from RE. But, as discussed earlier, converting from capacity to generation is challenging, since it requires making heroic assumptions about future capacity utilization factors. For our purpose here, we use the long term decadal trend of 0.55, but discuss below the implications of a much lower CUF for the grid as a whole in 2030. In addition, we apply the generation calculations to estimates of 2030 total grid capacity based on existing governmental and non-governmental studies from Table 2, rather than the INDC derived number in Table 1, which yielded a surprisingly low total installed capacity (and correspondingly low RE figure).

Based on these parameters, we estimate that under the 40% FFF pledge, while the RE component will account for about 28-31% of grid capacity, it will provide at least 13-14% share of electricity generation (Table 3).

Table 3 RE Blog

Significantly, these projections most likely provide the minimum floor of future RE, and therefore FFF, contributions to India’s 2030 electricity generation. This is because the RE share will increase under any of the following conditions: RE technologies mature and their capacity factor improves; grid management improves allowing RE to be used for greater periods, fossil fuel sources are used for balancing power, bringing down the overall CUF; India achieves the 175 GW target by 2022 and over-achieves the 40% FFF target. While the precise operating conditions for a future grid are difficult to predict, the above calculations provide the likely floor of future RE generation.

Future of Fossil Fuels

The FFF share of generation by 2030 (including nuclear and hydro) is likely to be at least 21-22% (Table 3), which means that fossil fuels, including coal, will provide as much as 78-79% of total electricity generation in 2030. The bottom line is that even with large RE capacity addition, coal generation (currently about 70%)[xi], is likely to remain a substantial share of total supply.

However, if instead, India achieves the 175 GW RE target by 2022 and continues to grow RE at a rapid pace, then the coal share could be less. Managing grid balancing issues will then grow in importance, suggesting that at least part of future non-RE investments should also serve as balancing power. The relative priority for the sector, growing coal to meet generation, or addressing balancing issues, depend on which of these trajectories India follows. Finally, even if RE meets a relatively modest share of generation needs in 2030, it avoids lock-in to even more coal, and holds the potential for future ramp up.

 Emissions Implications

What are the implications of RE growth for India’s mitigation actions? Electricity generation accounted for about 38% of India’s total greenhouse gas emissions in 2007.[xii] Assuming a similar share of electricity in the emissions mix in 2030, large absolute capacity increases in RE, when translated to generation terms, would displace at least 5% (4.9-5.3%) of India’s total emissions that would otherwise have been emitted, although this number is likely to be higher under different assumptions about grid functioning. This is not a trivial portion and critically avoids lock-in to a fossil fuel based electricity system that will continue reaping dividends post 2030.

In absolute terms, these displaced emissions are around 221-318 MT CO2e, and likely to be higher.[xiii] By way of context, the emissions reductions due to RE additions are likely to be of the same order of magnitude as South Africa’s total projected emissions range for 2025-2030, of 398-614 MT CO2e.[xiv]

Overall, the emissions implications of INDC’s electricity targets suggests that a domestic focus on RE cannot entirely substitute for attention to other sectors – yet, in an international context the resultant mitigation potential is significant.

The authors are Fellow and Senior Fellow respectively at the Centre for Policy Research, New Delhi.

For a detailed analysis of India’s INDC by the authors see “Neither Brake nor Accelerator: Assessing India’s Climate Contribution,” in the Economic and Political Weekly (October 17, 2015 issue).

[i] 15% is high in global terms, but lower than current Indian levels. See https://www.wec-indicators.enerdata.eu/world-rate-of-electricity-T-D-losses.html

[ii] CEA. 2015. All India Installed Capacity (in MW) of Power Stations- September.  Available at: http://www.cea.nic.in/reports/monthly/installedcapacity/2015/installed_capacity-09.pdf

[iii] Navroz K Dubash, Radhika Khosla, Narasimha D Rao, and K Rahul Sharma. 2015. Informing India’s Energy and Climate Debate: Policy Lessons from Modelling Studies. Centre for Policy Research, Climate Initiative.

[iv] Niti Aayog. 2015. India Energy Security Scenarios. Available at: www.indiaenergy.gov.in

[v] Navroz K Dubash, Radhika Khosla, Narasimha D Rao, and K Rahul Sharma. 2015. Informing India’s Energy and Climate Debate: Policy Lessons from Modelling Studies. Centre for Policy Research, Climate Initiative.

[vi] CEA. 2015. All India Installed Capacity (in MW) of Power Stations- September. Available at: http://www.cea.nic.in/reports/monthly/installedcapacity/2015/installed_capacity-09.pdf

[vii] US EIA. 2015. Analysis of the Impacts of the Clean Power Plan (Fig 8).

[viii] Teng, Fei. 2015. Understanding China’s INDC. Presentation at ‘Our Common Future under Climate Change,’ Paris.

[ix] Computed from CEA data at: http://www.cea.nic.in/reports/monthly/installedcapacity/2015/installed_capacity-09.pdf

[x] Source: CPR Analysis for the low nuclear scenario. See Table 2 notes for details.

[xi] CEA. 2012. Operation Performance of Generating Stations in the country during the year 2011-12: An Overview.

[xii] INCCA (Indian Network for Climate Change Assessment). 2010. Climate Change and India: A 4X4 Assessment—A sectoral and regional analysis for 2030.

[xiii] These figures are based on author calculations that India’s total GHG emissions in 2030 range from 4500-6000 MTCO2e. See: Khosla,R. and Dubash, N.K. 2015. Understanding India’s Emissions Intensity Pledge. CPR Climate Initiative Blog: https://cprclimateinitiative.wordpress.com/2015/10/13/understanding-indias-emissions-intensity-pledge/

[xiv] UNFCCC. 2015. Submission by South Africa: South Africa’s Intended Nationally Determined Contribution (INDC).

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3 thoughts on “What does India’s INDC imply for the Future of Indian Electricity?

  1. These are interesting findings. The researchers have not taken into account the energy to be produced from waste, which is a pet project of many ministers at state and union level. No mention of ‘waste to energy’ is appreciation worthy.
    http://wastenarratives.com/2015/09/14/energy-derived-from-muncipal-and-solid-waste-is-not-renewable/
    It will still be very interesting to see what will be the share of ‘waste to energy’ in the whole electricity gambit, my hunch is that very little.

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  2. Thanks for the interesting analysis and giving perspectives on pragmatic RE shares and corresponding emissions reductions. I am wondering if you have figures on how these emissions reduction corresponds to the share of emission intensity in 2030.

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  3. Brilliant study from Radhika and Navroz on the future trajectory of Indian energy generation, based on current policy and projections. It has huge implications on C02 emissions for our future generations. It is clear that nuclear and hydro with their high CUF should be the bedrock of any new policy, and extended by renewable energy expansion at an unprecedented pace of growth. Else we will be a fossil fuel economy based on coal for as far as we can see.

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