Balancing the energy transition journey by being aspirational yet pragmatic

The renewable growth in India has been, generally speaking, phenomenal. The target of reaching 500 GW by 2030 may look dauting but with the 2023 year ending with ~134 GW installed capacity for renewable energy, excluding large hydropower, and with wind making up 44.7 GW and solar 73.3 GW of it, there is need to start looking in parallel at the growing gap between RE commissioned capacity and RE generation capacity, one that will only widen henceforth, unless two areas are addressed immediately – Grid scale energy storage and a more effective and timely evacuation of power. A viability gap funding approach was outlined in the 2023-24 budget with a fiscal outlay for 4000MWh capacity of battery energy storage. The Central Electricity Authority in its Optimal Generation Mix 2.0 report of 2023 already highlighted the projected need for 60 GW of battery energy storage by 2030.

Renewables by themselves are however the necessary but not sufficient remedy to accelerate the energy transition journey of India. There are many sectors that are hard to abate and hard to electrify, such as thermal power plants, iron, steel and cement industry, refineries to name a few, and these would need carbon dioxide emissions mitigation technologies that are economically viable at scale. This is a much more daunting task than the RE goals and it therefore needs a pragmatic approach that balances national challenges with national priorities.

Two important developments in this respect have been the CCUS policy framework and deployment mechanism released by NITI Aayog in Nov 2022 and the cabinet approval to the National Green Hydrogen Mission in Jan 2022. It was heartening when in the 2023-24 budget the government made some big-ticket fiscal announcements for the energy transition journey. There were specific outlays meant to propel green growth, renewable energy and net zero. A holistic approach that the situation demands. For the National Green Hydrogen mission, 19700 crore was set aside, while the overall net zero journey was allocated 35000 crore.

The 2024-25 budget announcement has continued to keep a balanced and holistic focus on energy transition with commitments in the area of Green Energy and EV ecosystem. The fiscal outlays under green energy include the wind sector as well as the coal thermal plants.

a. Viability gap funding will be provided for harnessing offshore wind energy potential for initial capacity of one giga-watt.

b. Coal gasification and liquefaction capacity of 100 MT will be set up by 2030. This will also help in reducing imports of natural gas, methanol, and ammonia.

c. Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be mandated.

d. Financial assistance will be provided for procurement of biomass aggregation machinery to support collection.

The EV ecosystem outlay is rightfully to boost adoption and therefore the support is for manufacturing and charging infrastructure.

There are also some very important allocations that can be noted for the nuclear sector and it should see a boost with increase in capacity by 2030+.

For the country to meet its energy transition goals a balanced approach is very important that takes a sectoral approach and then maximizes the allocations for impact. It is also important for all stakeholders to consider this transition from an energy security and a ‘just’ transition point of view when making projections for the coming decade or two.

Author: Nikhil Tambe,

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