India’s Power Mix in 2024 | Trends and Forecast

Debmalya Sen is an energy sector professional with over 13 years of experience across conventional and clean energy systems. As India Lead – Advanced Energy Solutions at the World Economic Forum, he presently leads the Forum’s initiatives on Advanced Energy Solutions globally and spearheads the Forum’s work on Energy in India. In this article, he summarises the current status of India’s power mix, trends, forecasts and accompanying policy initiatives.

India’s total installed power capacity as of August 2024 stood at 446 GW, growing at an average of 4% annually. As per the National Electricity Plan, India’s peak demand in 2024 stood at 250 GW and is expected to reach 366 GW by 2031-32 (1.5 times the present peak).

Over the last decade, India’s power capacity has grown by 1.7X and is expected to grow 2X times with respect to 2024 by 2031-32. In 2024, the share of coal in the power capacity mix for the first time came below 50% (48% as of Aug 2024).

The percentage of renewables in the grid has seen a significant ramp-up in the last decade, from 12% in 2014 to 33% as of Aug 2024. Including hydro in the mix increases the capacity to 44%, overachieving India’s commitment at COP 21 to achieve 40% of its installed capacity from non-fossil fuel sources by 2030.

As of August 2024, Solar represents 44% of renewable energy capacity (including hydro) in India, followed by wind and hydro at 24% each.

While the capacity of renewables in the grid has increased, coal’s contribution remains significant to meeting the country’s energy requirements.

As of 2024, fossil fuel energy sources help meet 77% of India’s electricity requirement, while non-fossil fuel energy sources contribute to 23%.

Within fossil fuel sources, coal alone contributes 75% of the total requirement, and renewables, excluding hydro, contribute 13% of the total energy requirement. The contribution of renewables has increased by 7% in the last decade (2014–2024), but at the same time, the contribution of coal has not changed and has remained at an average of 75% through the last decade.

As per the National Electricity Plan, coal’s contribution in meeting India’s energy requirement is expected to drop to 50% by 2031-32, and that of renewables is expected to rise to 44% (including hydro). Solar is expected to contribute to 25% of India’s electricity demand requirement, followed by wind and hydro at around 10% each. In terms of capacity, Solar is projected to beat coal to become the biggest contributor to installed capacity at 364 GW (40% of installed capacity, from 19% in 2024), while coal is projected to reach a capacity of 252 GW (29%, from 48% as of 2024) by 2031-32, setting up ultra mega renewable energy parks.

India has set itself an ambitious target to achieve 50% of its energy demand from renewable sources by 2030 and achieve 500 GW of non-fossil fuel capacity by 2030. It has also committed to achieve NetZero by 2070. To achieve the same, the required acceleration in clean energy deployment in the country also needs a significant ramp up. The central government has, over time, brought several enablers to promote the accelerated deployment of clean energy sources in the country. These include forming competitive bidding guidelines for renewable and RE-Hybrid procurement, waiving ISTS charges for renewables till 2025-26, setting annual bidding trajectory for wind and solar (50 GW per year till 2027), setting renewable purchase obligations (44% by 2030) along with also promoting domestic manufacturing of renewable energy components in the country through production linked incentive schemes to name a few.

The increasing penetration of renewable energy in the grid also brings its own challenges. Being an inherently variable source, it poses challenges of grid management and thus raises questions on energy security and reliability. To integrate the increasing percentage of renewables in the grid, Central Electricity Authority (CEA) of India estimates the requirement of 74 GW of energy storage capacity in the grid, including 19 GW/128 GWh of pumped hydro and 42 GW/208 GWh of battery storage capacity in the grid by 2029-30 which further ramps up to 27 GW/175 GWh and 47 GW/236 GWh of PSP and BESS capacities by 2031-32 respectively. The same is expected to require a total investment of INR 111K Crores between 2022-2027 and INR 368K Crores between 2027-32.

The government has taken proactive steps to promote the accelerated deployment of these technologies by bringing in enablers not only to increase demand but also to secure and boost supply. Over the last few years, the central government has shared guidelines for competitive bidding of renewable with storage projects along with guidelines for standalone battery storage and pumped hydro (draft) projects. It has also set energy storage obligations and waived off ISTS charges on such projects. To address the higher costs of such technologies the government has introduced viability gap funding (VGF) of INR 3,760 crores to build 4 GWh of standalone BESS capacity, with a proposal to also extend a similar VGF for pumped hydro projects. The Government has also equally emphasized supply-side enablers, including a PLI scheme to create 50 GWh of domestic ACC battery manufacturing plants in India by 2025 with a total budgetary support of INR 18,100 Crores. Support has also been extended to secure the supply of critical raw metals and minerals for such technologies.

To achieve Net Zero, it is essential to look into decarbonizing the other hard-to-abate sectors that constitute a substantial proportion of carbon emissions. India has set an ambitious target to achieve a production capacity of 5 MMTPA of Green hydrogen by 2030, which is considered a critical enabler to help decarbonize hard-to-abate sectors. The country also targets a manufacturing capability of 40 GW of electrolyzers by 2030 to achieve this. Union Budget of 2024-25 has also announced support to promote advanced nuclear technologies (Bharat modular reactors), as there has been a growing sentiment across think tanks and countries that Nuclear will need to play an important role for countries to be on track of Net Zero ambitions.

India’s energy transition journey has made significant strides, but with such ambitious targets, the deployment rate of such clean energy technologies will need much greater impetus. While progress is being made in green hydrogen, energy storage, advanced nuclear and renewables, it is not close to the pace India requires to achieve its 2030 goals. The technologies themselves are going through their innovation journey and thus demand policies and guidelines to be fungible to keep up with the sector’s progress and trends. Overall, it is a great time to be in this sector and see it grow and transform at a speed and scale never witnessed before.

This article was published in the Cleantech Hero Jul-Aug 2024 issue.