- India’s major public sector companies in the energy sector are diversifying into the renewable energy generation. This step is going to be crucial to the country’s clean energy transition journey over the next 15-20 years.
- Public sector companies such as Coal India Limited and NTPC, along with other state-owned companies and government departments, have announced targets to move into the renewable energy market. It has been followed by the major private sector companies announcing their own ambitious plan to pursue green energy.
- The experts laud the move by public sector companies but note that it doesn’t mean an immediate phasing out of coal, which would remain a crucial part of India’s overall energy mix.
The 2022-2030 period is significant for India’s energy transition and the rapid adoption of clean energy. Particularly crucial is India’s energy behemoths in the public sector – Coal India Limited (CIL), the world’s single largest coal producer, and the NTPC, the thermal power giant – diversifying their business portfolios into renewable energy sector.
India has a target of installed capacity of 450 gigawatts (GW) of renewable energy by 2030 from about 105.8 Gigawatts (GW) in January 2022. Over the last year, most of the top and large energy players – both public and private sector – announced ambitious energy transition plans. However, the clean energy transition path, announced by the likes of CIL and the NTPC, as a result of the government’s international climate commitments announcements, inspires confidence in the direction that the sector is taking.
In June 2021, NTPC had announced a target of installing 60 GW of renewable energy capacity by 2032, making it a significant part of its energy generation portfolio. It accounts (till March 2020) for about 16.78 percent of India’s total national capacity and 20.96 percent of total power generation. The total installed capacity of the company is 68.56 GW which includes 24 coal-based projects, 7 gas-based, 13 solar, and one each of hydro, wind, and small-hydro.
In fact, the NTPC started diversifying into green industries several years ago. In August 2016, NTPC issued Green Masala Bonds (GMBs) – issued outside of India but denominated in Indian rupee – for the first time and its proceeds went into funding wind and solar energy projects in the subsequent years, contributing towards its renewable energy targets. In October 2020, NTPC established a renewable energy subsidiary NTPC Renewable Energy Limited to diversify the business portfolio and to ‘build, own and operate’ renewable energy projects. NTPC is also partnering with the International Solar Alliance, a network of countries endorsing solar energy, and is set to implement solar projects in member countries.
Similarly, CIL had announced an investment of about Rs 58 billion ($760 million) by 2024 for 3 GW of solar power projects. In April 2021, CIL established two wholly-owned subsidiaries – Solar PV Limited and CIL Navikarniya Urja Limited for manufacturing solar value chain products and for undertaking renewable energy projects. In September 2021, CIL announced a plan to establish a 4 GW solar PV module manufacturing plant.
These companies have a bigger role to play beyond just installing renewable energy projects. In its recent report, the International Forum for Environment, Sustainability and Technology (iForest), a think-tank, while talking about the role of CIL and NTPC in just transition of Korba, which is India’s biggest coal-producing district, said these “companies have land and assets that can be repurposed for RE investments.”
“For example, for CIL, rehabilitation of mines and repurposing of the reclaimed mine area and existing infrastructure provide crucial infrastructure for the company to invest in green industries. Similarly, for NTPC, repurposing of the existing asset and land in Korba can help to diversify the company’s green investment portfolio. Such investments will also help to reduce disruptions and allow an orderly transition in the district,” the report had noted.
However, what should be noted is that the argument about the repurposing of the reclaimed mines of CIL and repurposing of assets by NTPC for clean energy projects could hold true not just for Korba but also other parts of the country as these two hold assets across India.
Former chairman of Coal India Limited Partha S. Bhattacharyya, while talking about the foray of CIL and NTPC into renewable energy, said, they “have to do it.”
“NTPC is in the business of power and they will remain in that even if the source of energy changes. On the other hand, CIL has already started making moves towards renewable energy. It also has the option to think of efficient coal gasification. What we also need to remember is that the renewable energy sector needs minerals and CIL can diversify in mining for them. It can turn into a mining company to secure those minerals for the country. There are immense possibilities for such public sector companies to ride the energy transition bandwagon,” Bhattacharyya told Mongabay-India.
Other public sector units and private players follow suit
The CIL and NTPC are not alone in the renewable energy path as they are joined by other key public sector units, government departments, and even top private energy players of the country.
For instance, Indian Railways has already made announcements to achieve net-zero emissions by 2030, and install 20 GW of solar power plants. It also issued $500 million green bonds in 2017. In addition, the state-owned Oil and Natural Gas Corporation has joined hands with the NTPC for setting up renewable energy projects in India and overseas. It targets acquisitions to achieve 10 GW of renewable capacity by 2040.
The focus of the government and the public sector units, in addition to the market sentiment, has also led to other private players making big announcements. Among them, Adani Green Energy Limited has set a target of achieving 45 GW renewable energy capacity by 2030, and last year announced an investment of $20 billion in renewable energy development over the next decade.
The other major player, Reliance Industries Ltd, in January 2022, announced an investment of about $80 billion in green energy projects over the next 10-15 years while targeting net-zero carbon emissions by 2035.
Another significant player, Tata Power aims to scale up its renewable energy capacity to 15 GW by 2025 and scale up clean energy generation to 80 percent of its total power generation phasing out fossil-fuels-based generation. In February 2022, Tata Power signed a Memorandum of Understanding (MoU) with RWE Renewables GmbH, one of the world’s leaders in offshore wind, to explore the potential for joint development of offshore wind projects in India.
However, amidst the major announcements by private players, what is to be noted is that coal will remain a critical part of India’s energy sector for at least 15-20 years.
Partha S. Bhattacharyya said the energy transition story in India is in stark contrast with the rest of the world.
“Many countries have reached a stage where renewable energy is actually replacing thermal power. But that is not the case with India where we require a lot more energy and where renewable energy is actually complementing thermal power. We need both – more of the renewable clean and thermal energy. In fact, according to the latest projections by the Central Electricity Authority, we are targeting 450 GW of renewable by 2030 from about 100 GW right now … And the same time we are looking at 30-35 percent growth in thermal power capacity as well,” Bhattacharyya explained to Mongabay-India.
“In India, the per capita consumption of energy is very low and for the country’s growth, it needs to move upwards. The fruits of development have to reach the last person in the line. So between now to say 2030-35, I see renewable energy complementing thermal power not replacing it. In other countries, the thermal capacity in operation is close to maximum but in India that is not the situation,” he said.
Banner image: By 2030, India plans to install 280 gigawatts of solar power. Photo by Prashanthns/Wikimedia Commons.