In 2023 we consumed 620 EJ (1 exajoule = 10^18 joules). More than 85% of that came from fossil fuels. And there lies the tale of renewable energy.
Much like ESG, renewable energy though good is struggling to find its moment in the sun. In the course of my research, I came across many heart-warming moments. Cochin International Airport is the first in the world to run completely on solar power, farmers in India using solar powered pumps, vendors are using solar powered motors for drying fruits and vegetables, dramatically lower household electricity consumption on installation of rooftop solar panels. Countries like China, India and US are at the forefront, creating policies to increase installation and generation. However, various challenges are putting a spanner to widespread adoption.
Current trends in energy consumption
1. World energy consumption increased by 2% in 2023 with nonrenewable sources (including nuclear energy) contributing about 85% of the 620 EJ consumed.
2. Consumption from renewable sources grew by 5.2%
3. Asia Pacific region accounts for the single largest group at 47% of total energy consumed, led by China, India and Japan. These three countries consumed about 36% of total world energy
4. Asia Pacific also consumed about 45% of total renewable energy of 90 EJ in 2023
5. The top 5 countries worldwide – China, US, India, Russian Federation, Japan – account for about 57% of energy consumed.
6. Norway (71.86%), Sweden (53.95%), and Brazil (50.32%) topped the list of countries to get the highest proportion of energy from consumable sources.
7. North America, CIS and Middle East consumed greater than global average of energy per person in 2023
8. China, US and Brazil led consumption in renewables (absolute) – China is way ahead of the next two countries.
Renewable Energy
The table below for sectors by demand and supply show the overwhelming tilt towards non renewables. This data from 2021 may well have changed in the last 3 years but, as my research shows, not by much. Despite all the focus and policies by a few governments, much needs to be done for wide-spread adoption of renewables across the 4 demand sectors
Driven by China, Asia Pacific remains the leader in renewable energy generation. In 2023, the region produced 4,100+ terawatt-hours, 46% of the world total. This was driven by growth in solar (26.3%) and wind (15.9%). Hydro, as a source saw an overall contraction compared to 2022
The top 5 countries, with government support and clearly laid out policies, are driving the renewable energy sector. In 2023 China (at 2,894 TW-h) produced more than the next 5 countries. Each of these are seeing a push from solar and wind.
Biofuels in the form of biogasoline and biodiesel are fast emerging as an alternate source of renewable energy.
Renewables in India
India is at the forefront of renewable energy. It is one of the 13 countries in the world to have policies in place for all 4 demand sectors – industry, buildings, transport and agriculture. The setting up of a dedicated Ministry and having policies in place has meant solid government support for creating the infrastructure to set up and increase installed capacity. The work done in the last decade has translated into an installed capacity of ~200 GW as of August 2024 (excluding nuclear power). This has been backed by consistent investment in the RE sector.
Renewable energy now has a share of ~43% in total installed capacity and accounts for 20.7% of total electricity generation in the country.Solar power is powering the shift towards renewals. Installation has increased from 22.4 GW in FY23 to 52 GW in FY24.Government schemes in support of solar power have been helping in increasing the usage.
The Solar Park Scheme (benefits to states and union territories for setting up time-bound solar parks),
PM Kusum Scheme (financial support to farmers for installation of solar pumps and solarization of existing grid-connected agricultural pumps),
PM Surya Ghar: Muft Bijli Yojna (financial support for installation of rooftop solar panels and subsidy for residential households)
PLI Scheme for high efficiency Solar PV Modules
CPSU Scheme Phase II (viability gap funding for central public sector undertakings that are setting up grid-connected solar PV power projects with domestic cells and modules)
New Solar Power Scheme under JANMAN (1 Lakh households in particularly vulnerable tribal groups’ have been sanctioned to cover electrification by off-grid solar systems. Introduced in Jan 2024, 5000+ households have already been given sanction)
Budget 2024 allocated Rs 10,000 crore for solar power grids
The Budget also gave exemption of basic customs duty on import of 25 critical minerals important for renewable energy sectors
Growth Drivers of Renewables in India
1. Government Commitments
o Reduce total projected carbon emission by 1 billion tonnes by 2030
o Reduce carbon intensity by less than 45% by 2030
o Achieve net zero carbon emissions by 2070
2. Proposed solar cities and parks
o 57 solar parks of 39.28 GW approved
3. National Green Hydrogen Mission
o Approved; initial outlay of Rs 19,744 crore
4. Wind Solar Hybrid Policy
o Policy announced in 2018
o Combine solar and wind to address the intermittency challenge of one renewable power source, resulting in better grid stability
5. Atma Nirbhar Bharat
o PLU scheme for solar PV manufacturing with an outlay of Rs 24,000 crore
o Basic customs duty of 25% on solar cell and 40% on solar PV modules wef 01.04.2022
6. FDI
o 100% FDI allowed automatic route in projects of renewable power generation and distribution
The way forward for Renewables in India
1. India aims to build 500 GW of renewable energy capacity by 2030.
2. Banks and financial institutions have committed about USD 385 billion for the development of RE projects by 2030.
3. Energy storage is a critical issue to resolve in order to ensure grid stability and to address the intermittency in solar and wind energy sources. The government has announced new policy initiatives to incentivize energy storage.
4. While China is expected to drive the expansion in capacity, India will see the fastest growth among large economies in the next 6 years. This is aided by
a. Rapid expansion of auctions
b. Introduction of new support scheme for rooftop PV
c. Strong support from Banks and financial institutions
5. India, along with China, Europe and US is expected to provide 80% of total capacity of 11,000 GW in 2030
Issues with Renewables in India:
High cost of manufacturing PV modules for solar panels in India.
Requires massive investments in components, storage and grid infrastructure to drive down the costs and achieve scale
Storage capabilities need to be developed and deployed.
Disparity in cost of capital for onshore wind and solar PV. In high income countries, the weighted average cost of capital is around 4%. This shoots up to ~10% in low income countries
Data for share of renewables by demand sector is not available at the time of writing. Insights into pace of adoption would come only from regular publishing of such data
Above all, the adoption of renewables by industry, buildings and transport continues to be quite low.
Top Renewable Energy Companies in India
Waaree Energies, which went public yesterday, has an aggregate installed capacity of 12 GW
Research-Lab View:
Outlook – positive
Time frame for investment – 8 to 10 years
Game changer – possible solutions in storage, reduction in cost for solar components, export at $1.8 billion (CY2023), huge untapped markets in Europe, Russia, Africa.
Appendix:
1) Key Minerals - production Vs reserves
2) Energy use by Demand Sectors
3) Renewable Energy Supply Side:
Sources:
1. The Energy Institute – Statistical Review of World Energy 2024
2. REN21 – Renewables 2024 Global Status Report
3. Ministry of New and Renewable Energy – Akshay Urja Report, Sept 2024
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