India has moved up to the second spot this year, from the third spot for the last two years, in this year’s ‘Renewable energy country attractiveness index’, said a report released by EY globally.
This as per the E&Y report is primarily due to a combination of strong government support and increasingly attractive economics.
As per the report, India continued its upward trend in the index to second position with the Government’s program to build 175 GW in renewable energy generation by 2022 and to have renewable energy account for 40% of installed capacity by 2040. The country has added more than 10GW of solar capacity in the last three years – starting from a low base of 2.6GW in 2014.
“In the medium term, as renewable energy penetration rates increase, the Government will have to turn its attention to the ability of India’s grid to manage intermittent renewables, especially around the evening peak, when solar availability falls away. The cost and availability of energy storage technology could dictate how close India gets to meeting its renewable targets. Meanwhile, India’s regulators must be mindful of the erosion of electricity market peaks caused by growing volumes of renewables and storage – this can undermine the economics of thermal power plants, risking the stability of the system as a whole,” said Somesh Kumar, Partner & Leader, Power & Utilities, EY India.
The report also suggests that the Indian Government needs to increase compliance with the Renewable Purchase Obligation (RPO), as well as ensure that India’s distribution companies, many of which are financially distressed, have the capacity to continue to purchase renewable electricity, especially if bid prices level off or rise.
And the availability of capital remains a concern; the Government could ease rules around tapping foreign debt. Also, the Government’s additional emphasis on photovoltaic (PV) parks will help to plug the gap, but it needs to do more to encourage rooftop solar installations.
The report cites that China (1) and India (2) have surpassed the US and the fall – the first for the US since 2015 – to third in the ranking of the top 40 countries follows a marked shift in US policy under the new administration.
The report identifies the US Government’s executive orders to rollback many of the past administration’s climate change policies, revive the US coal industry and review the US Clean Power Plan as key downward pressures on renewable investment attractiveness.
Economically viable renewable energy alternatives coupled with security of supply concerns are encouraging more countries to support a clean energy future. Kazakhstan (37), Panama (38) and the Dominican Republic (39) have all entered the index for the first time.