At COP26, India announced its objectives to reach net zero by 2070. In addition, the country aims to install 500 GW of non-fossil capacity by 2030, 450 GW of which would come from renewable energy sources. India has set an ambitious renewable energy capacity target. By the end of the decade, India aims to rely on non-fossil fuel sources for close to 60% of its energy needs. Additionally, as part of its commitments, the country intends to cut its national emissions intensity by up to 45% by 2030.

India has made impressive progress. As of August 2021, 100 GW of renewable energy capacity had been brought online with a further 50 GW under construction and 27 GW under auction. But there is no room for complacency. To more than quadruple its installed capacity by 2030, India will need to invest USD 500 billion annually through 2030, according to the Institute for Energy Economics and Financial Analysis.

Lockdowns to deal with the COVID-19 pandemic ground the country to a halt and slowed the pace of renewable energy installations. Only 4.4 GW of renewable energy was commissioned in 2020, BNEF estimates. This is a steep drop from 10 GW installed in 2019. Nevertheless, renewables continue to break records. An auction in November 2020 yielded a record low tariff of INR 2/kWh (USD 0.03/kWh). And, as India emerges from the pandemic and returns to growth, the outlook for renewable energy looks bright.

Renewable energy installations look set to rebound strongly to nearly 12 GW in 2021.1 Even with this bounce back, it seems India will be hard pressed to hit its 175 GW target. However, despite its renewable efforts, India continues to bring online significant coal capacity. About 34 GW of coal is currently under construction, and the country has about 21 GW in its pre-construction pipeline (6% of the global pipeline). Worryingly, the stranded risk of these assets is significant. As the growth in India’s energy demand slows, and the number of renewable energy installations rises, the utilisation rate of coal plants will continue to decline. As such, their economics will deteriorate further. Increasingly, renewable energy will not only capture demand growth in India, but will replace installed thermal capacity.

Download and read the full report here: Coal vs RE REPORT

Centre for Financial Accountability is now on Telegram. Click here to join our Telegram channel and stay tuned to the latest updates and insights on the economy and finance.