Will India stall or soar from 2024?

India’s Prime Minister Narendra Modi came to power in 2014 pledging support for renewables. In 2016, his government promised to grow installed capacity to 175GW by the end of 2022, including 100GW of solar and 60GW of wind.

There is now just one financial quarter left for the country to reach this target and it is going to fall short.

India had 116GW of installed renewables at the end of August, or two-thirds of the year-end target, and has reneged on its 2030 goal to install 500GW of renewables. This is due to legacy issues with the supply chain, electricity grids and the impacts of competitive auctions, as well as delays caused by Covid-19.

But this isn’t simply a story of ambitious targets missed. Yes, India has issues it needs to solve, but it continues to attract major interest from investors too.

Last week, news emerged that Brookfield Asset Management is reportedly looking to buy a $1bn stake in Indian developer Greenko; and, in August, ReNew Power netted $1bn project finance for a 1.3GW hybrid renewable energy and storage project from 12 lenders, including Rabobank. Headline-making deals are still being done.

In addition, we have seen a series of huge turbine deals signed in the last six weeks. Continuum Green Energy placed 218.7MW and 119MW orders with GE Renewable Energy and Senvion respectively; Sembcorp picked Suzlon to supply 180.6MW; and Azure Power signed a framework deal with Siemens Gamesa for 346MW. This shows developers want to pursue new projects despite longstanding market issues.

However, will India be able to fully take advantage of this interest in the years ahead? It will take deft footwork from policymakers at all levels.

Missed potential

Annual wind installations in India are set to increase in the next two years, according to analysis from the Global Wind Energy Council and consultancy MEC+ released in August.

This forecast that wind farms totalling 3.2GW would complete this year, and rise to 4.6GW in 2024 – before falling to 3.5GW in 2026, unless politicians take steps to address legacy issues and respond to market changes. Key shifts include the growth of hybrid projects compared to pure wind or solar.

The pair said India must take five steps to unlock wind’s potential this decade:

• Strengthen coordination between national and state governments to produce an aligned roadmap for wind and give clarity to the sector.
• Promote technology exchange and alignment with companies in wind’s global supply chain, to create export opportunities for turbine makers based in India.
• Promote repowering of wind farms as a way to boost productivity of sites and bring socioeconomic benefits, backed by fast-track approvals.
• Address legacy issues including delayed payments to power distribution firms, the inadequacy of the grid, and changes in state land policies.
• Support the growth of India’s offshore wind sector with comprehensive state development roadmaps, especially in Gujarat and Tamil Nadu.

Those are sensible suggestions – but they contain an acknowledgement that central government can only do so much. It is all very well for Modi to call on states, citizens and companies to prioritise “green growth” and “green jobs”, as he did while talking at the National Conference of Environment Ministers of all States last week.

But his government must take some blame for wind’s slow progress in India in the last five years. The design of capacity auctions introduced in 2017 reduced the returns for developers, created bottlenecks and slowed project activity.

The upshot is that early wind auctions were undersubscribed as developers ignored the low prices on offer – which has only recently changed – and manufacturers have suffered too. The country’s apparently ambitious target of cutting emissions to net zero by 2070, rather than 2050, also sends a message at odds with Modi’s desire for renewables.

So, is wind in India going to stall or soar after 2024?

The problems identified above will not be solved overnight. Some will not be solved at all. But the government has been making low-key but positive steps over the last year that has enthused the private sector.

These include changes to tender designs, additional capacity for the grid, and pledges to support additional capacity for wind.

Pure wind projects still have a role but, from 2024, the biggest opportunities look set to be for projects that pair wind with other forms of generation, such as solar, or emerging technologies such as green hydrogen.

This could unlock support for up to 13GW of hybrid projects annually from 2024, according to GWEC and MEC+ – but it will only happen if Modi and his supporters can learn from the mistakes of his first eight years.