India's power sector has experienced substantial growth in recent years, driven by economic expansion that has consistently raised the demand for electricity. According to the Central Electricity Authority (CEA), in the previous financial year, demand surged by more than 8 percent to reach a historic 1622 billion units. The Ministry of Power reported that the peak demand during the summer of 2024 has already reached 250 GW, up from 243 GW in 2023 and 216 GW in 2022.
The upcoming Union Budget of July 2024 is expected to continue its emphasis on renewable energy, which accounted for 71 percent of India's new capacity additions in FY24, as indicated by an article in the Economic Times.
Over the past decade, India has led a successful solar capacity expansion initiative. According to a report by the CEEW Centre for Energy Finance (CEEW-CEF), India added a record 15 GW of solar capacity in FY24, driven by declining costs and robust government backing. The government plans to build on its efforts to promote rooftop solar through the PM Surya Ghar Muft Bijli Yojana, which offers financial support for up to 3 kW of solar power per household.
To achieve its target of 500 GW from renewables by 2030, the pace of expansion needs to accelerate significantly, possibly aided by extending the concessional corporate tax rate beyond March 31, 2024, as suggested by the CEEW-CEF report.
Despite these advancements, the growth in onshore wind capacity has been modest, with only 3 GW added in FY24. Challenges such as the lack of a robust domestic equipment ecosystem and project execution delays continue to hinder progress in this sector. However, onshore wind remains crucial for achieving a net-zero power grid due to its higher energy output and consistent availability throughout the day. Implementing long-term financial mechanisms like contracts for differences could potentially expedite the integration of wind power into India's energy landscape.
