Executive Summary
Current Market Needs
Recent Market Trends
Competitive Landscape
Best Prospects for U.S. Exporters
Regulations / Registration Process
Market Entry
Technical Barriers & Tariffs
Procurement & Tenders
Upcoming Trade Events
Local Industry Resources
U.S. Commercial Service Information
Tab Options
Executive Summary
Current Market Needs
Recent Market Trends
Competitive Landscape
Best Prospects for U.S. Exporters
Regulations / Registration Process
Market Entry
Technical Barriers & Tariffs
Procurement & Tenders
Upcoming Trade Events
Local Industry Resources
U.S. Commercial Service Information
Executive Summary
India is home to more than a billion people and one of the world’s fastest growing economies with a huge demand for energy. With an installed capacity of 88 gigawatts (GW) as of August 31, 2020, India is also one of the fastest growing markets for renewable energy. Despite fossil fuels still accounting for 62.1 percent of its energy mix, India aims to reverse the trend by increasing its installed electricity generation capacity from clean sources from the current 23 percent to 60 per cent by 2030.
The Government of India (GOI) under the leadership of Prime Minister (PM) Modi has been driving the renewable energy growth full steam since 2014. Six years ago, the GOI set up an ambitious target of achieving 175 GWs of renewable energy by 2022, and over the years made several successful policy changes to initiate growth and stimulate increased private sector participation and investments in the sector. Additionally, India became a signatory to the CoP21 in 2016 and since then has been making conscious efforts to diversify its power generation sources and shift them significantly towards renewable energy sources for reduced emission volumes. Most recently at the United Nations Climate Action Summit in September 2019 India announced its plan for increasing the renewable energy target to 450 GW by 2030
Standing as the fourth most attractive renewable energy market in the world, as per the Renewable Energy Country Attractiveness index 2019 by EY, India has made huge progress in the renewable energy sector gaining the position of the fifth largest installed capacity of renewable energy in the world, fourth largest installed capacity of wind power in the world, and fifth largest installed capacity of solar power in the world. Looking ahead, the government has laid out a vision to bring affordable, secure and sustainable energy to all citizens.
Current Market Needs
India’s power consumption is increasing daily due to the increase in demand for power and growing population. The government’s interest in deploying new renewable energy source is being drive is to advance economic growth, as well as improve access to reliable, affordable and sustainable energy for Indian consumers. India’s longer-term renewable target of 450 GW by 2030 is viewed as aggressive, but achievable by leveraging innovative technologies, greater policy support from the government and FDI opportunities in the Indian renewable energy.
Recent Market Trends
As of August 2020, the total installed renewable energy capacity is 87.7 GW, of which solar and wind comprises 35.7 GW and 37.9 GW respectively. Biomass and small hydro power constitute 10.3 GW and 4.7 GW, respectively. 35.86% of India’s installed electricity generation capacity is from renewable sources, generating 21.22% of total utility electricity in the country.
The energy sector in India is moving towards building a greener energy infrastructure, as a part of larger climate goal to reduce its carbon footprint. According to the global greenhouse gas emissions data by the Environmental Protection Agency, the energy production from conventional energy sources like coal, oil and gas have contributed to one-third of the global greenhouse gas emissions. Hence, the Government of India’s focus is to utilize the natural resources abundantly available in India to achieve sustainable growth and avoid catastrophic climate change. Large scale sustainable power projects and promoting green energy will simultaneously increase job opportunity at all levels, especially in rural areas.
The use of renewable energy was once costly for businesses to implement. However, with continued technological innovations and emerging trends, solar and wind energy is now available at costs comparable to traditional forms of energy and at higher efficiencies. With increasing demand for renewable energy across India, artificial intelligence, blockchain implementation, and machine learning is now being evaluated for transforming the solar power technology into cost-effective forms of sustainable energy solutions.
According to the Institute of Energy Economics and Financial Analysis (IEEFA), India’s renewable energy sector would require a new investment of $500 to $700 billion by 2030 to meet its target of 450 GW capacity. The Government of India’s mandate for the renewable energy sector has opened a plethora of opportunities for investors in this sector. Over the past few years, the GOI has made several regulatory reforms for facilitating increased investments in the sector, and also announced several financial measures such as tax breaks for setting up huge manufacturing plants for solar cells, lithium storage batteries, electric vehicles and charging infrastructure.
A report from PGCIL stated India’s transmission and distribution system would require a significant expansion in order to withstand the increase in demand of electricity in the coming decade. Hence, there is a need to focus on strengthening the grid and proper evacuation infrastructure is required to support the scale-up of renewable energy.
In a solar energy project, solar photovoltaic (PV) panels/modules account for around 60 percent of the total project cost. With the increasing penetration of solar power in the Indian energy mix, the solar PV panel market is expected to see a boost. The majority of India’s solar projects are on grid scale segments. However, the technological developments in the solar rooftop PV segment such as net-metering, feed-in tariff, accelerated depreciation mechanism, generation based incentives, and others, have pressed the use of renewable solar energy at a smaller scale. Because of this, the solar rooftop PV market is expect to experience a boost in the coming years.
With the increase in demand for flexible power systems, the need for energy storage system has also increased. The integration of massive renewable energy capacity is expected to be challenging for grid operations, in turn causing energy storage to be a critical component of the energy infrastructure strategy. Additionally, the energy storage system can be used for a variety of applications – e-Mobility, utility scale, behind the meter, and grid and off-grid application. There needs to be a combination of solar and battery combinations to meet India’s round the clock capacity utilization factors.
Competitive Landscape
The renewable energy sector in India is dominated by private sector players, unlike in its transmission and distribution sector.
Tata Solar has been one of the biggest and oldest solar panel manufacturing operations in India. The company is engaged in manufacturing of solar cells and modules. They also provide engineering, procurement, and construction (EPC) services. The company has a strong presence in industrial, commercial, on-grid and off-grid solar projects, and residential segments. In the past 20 years, Tata Solar has shipped approximately 1.4 GW of solar modules worldwide, installed 1.5 GW of utility scale, and added another 200 MW of rooftop solar projects in India.
Adani Solar is the Solar PV manufacturing and EPC arm of the Adani Group; one of India’s largest business conglomerate with resources and logistics in the energy and ancillary industries. It is India’s first and largest vertically integrated solar company, offering products along with services across the spectrum of photovoltaics manufacturing. The company plans to expand to 3.5 GW of annual production capacity, putting it in the top 15 global solar manufacturers. Adani Group’s Chairman, Mr. Gautam Adani, has stated his goal is to grow the company to the world’s largest solar power company by 2025, and the largest renewable power company by 2030.
Suzlon is one of India’s leading renewable energy companies in the service of designing, developing, manufacturing wind turbine generators (WTGs). It provides allied services, giving the company a strong presence across the wind power value chain. It does business in 18 countries across six continents. Also, Suzlon is known to have the largest installed wind energy capacity in India, with an installed capacity of 626 MW in FY18.
ReNew Power Ventures, founded in 2011, operates as an independent power producer. The company is engaged in the generation of non-conventional energy through solar and wind power. It sells power to state electricity boards and large industrial companies in India. Renew Power is India’s largest renewable energy independent power producer with a capacity of more than 5,800 MW of wind and solar power assets across the country. Of this, more than 3,900 MW of assets are already operational.
Best Prospects for U.S. Exporters
India is a growing economy and its energy demand is rising. As the economy grows, the power consumption is projected to reach 15,280 TWH in 2040. The government’s ambitious aim to increase the capacity of renewable energy presents a huge opportunity for investors to tap into India’s renewable energy potential.
Energy Storage:
Electric Vehicles:
Solar PV:
Regulations / Registration Process
The Ministry of New and Renewable energy (MNRE) is the nodal Ministry of the Government of India; the highest authority on all matters relating to new and renewable energy. MNRE aims to develop and deploy new and renewable energy for supplementing the energy requirements of the country.
Market Entry
India allows 100% permitted foreign direct investment in the renewable energy sector under the automatic route, and no prior government approval is required. The sector has significant government presence, but is dominated by private sector players in India. While India allows import of renewable energy products, local manufacturing is being increasingly promoted and the Ministry of New and Renewable Energy (MNRE) now mandates all solar PV modules, inverters, and storage batteries to be BIS certified. As India is a large market that issues a sizeable amount of tenders it is advisable to work with a local Indian partner who is actively involved in this sector.
Technical Barriers & Tariffs
One of the key issues affecting growth of the renewable market in India is the delayed or non-payment by distribution companies (discoms) to clean energy developers. This specific challenge has been further aggravated throughout COVID crisis. Companies also report challenges with slow land acquisition for projects, and contract sanctity violations.
On July 30, 2018, India’s Ministry of Finance announced the imposition of safeguard duties (of 25 percent to be progressively reduced to 15 percent) on imports of solar cells and modules from China and Malaysia for a period of two years. The COVID crisis and the recent Indo-Chinese bilateral tensions have resulted in India extending the imposition of the safeguard duties by another full year to July 2021.
India prohibits the import of ethanol for fuel use. In 2019, the Government of India restricted the import of all bio-fuels including ethyl alcohol, bio-diesel, and petroleum oils for all purposes and their import will now require import license from the Directorate General of Foreign Trade (DGFT). This will have a major impact on all U.S. ethanol commodity exporters, if the situation goes unresolved. Demand for industrial-use ethanol is increasing as supply is increasingly diverted to the fuel industry, however, and the challenge is to supply a landed cost at par with domestic pricing.
India lacks R&D capability to solve critical problems in promoting clean energy and overcome the inadequate technology issue and absence of required infrastructure. The initial unit capital costs of renewable projects are very high when compared to fossil fuels. This increase in costs leads to financing challenges and initial burdens.
On June 4, 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) revised its 2017 procurement order to further push its “Make in India” program, restricting all government contracts up to $28 million for domestic companies or foreign companies with manufacturing capacities in India to bid on. This will significantly hinder U.S. industry’s ability to participate in central and, possibly, at the state levels projects. Further, the new order also allows agencies to determine the amount of local content required.
Procurement & Tenders
For upcoming tenders, please visit the Ministry of New and Renewable Energy Website:https://mnre.gov.in/tenders/recent/
Upcoming Trade Events
RE-INVEST November 26-28, 2020
Renewable Energy India E-Expo December 10-12, 2020
Solar India, March 24-26, 2021
Inter Solar India, December 15–17, 2020
Renewable Energy India Expo – December 10–12, 2020
U.S. Commercial Service Information
Anisha ShashidharanAnisha.Shashidharan@trade.gov
