In News:

India’s energy sector is witnessing a paradoxical challenge: while 44 GW of renewable energy (RE) capacity is ready for deployment, it remains stranded due to lack of Power Purchase Agreements (PPAs), weak demand absorption, and systemic barriers. This “green energy paradox” highlights the tension between India’s global climate commitments and its domestic energy realities.

Current Energy Landscape

Despite global recognition for its renewable push, India’s energy mix remains heavily dependent on coal:

• Coal & lignite: ~79% of domestic energy (FY23).
• Renewables (excluding large hydro): Only 3.8% of domestic production.
• Oil & gas imports: Over 85% oil and 50% gas, making India highly import-dependent.

While renewable capacity is expanding, India continues to lock itself into long-term coal PPAs, raising both environmental and economic concerns.

Green Energy Paradox: Two Dimensions

1. Supply-Side Readiness

• 44 GW of RE projects are deployment-ready but idle without PPAs.
• Tariff challenges: Solar power in India remains costlier than global benchmarks due to high cost of capital, GST, duties, and import taxes.
• Storage costs: Storage-backed renewables (battery/pumped hydro) raise tariffs to ?6.6–?9/unit, making them uncompetitive against coal.
• Government interventions: Initiatives like the National Solar Mission, Hybrid Policy, Production-Linked Incentive (PLI) for batteries, and Viability Gap Funding (VGF) aim to reduce costs and promote adoption.

2. Demand-Side Weaknesses

• Discom reluctance: Financially stressed state distribution companies (discoms) prefer coal PPAs due to predictable pricing.
• Grid inflexibility: Poor transmission capacity, absence of smart meters, and weak demand-response systems hinder RE integration.
• Slow electrification: With electricity accounting for just 20% of India’s total energy consumption (vs. 28% in China), limited adoption of EVs, electric cooking, and industrial heating suppresses RE demand.
• Reliability deficit: India’s System Average Interruption Duration Index (SAIDI) stands at 600 minutes/year, compared to 35 minutes in Thailand and 46 in Malaysia, deterring energy-intensive industries.

Barriers to Integration

• Structural: Debt-ridden discoms, weak cross-subsidy frameworks, and lack of flexible grids.
• Economic: High capital costs, expensive borrowing, and unviable storage solutions.
• Environmental: Long-term coal lock-ins undermine India’s Net Zero 2070 goals, while idle RE capacity delays emissions reduction.

Initiatives Taken

• Renewable Purchase Obligations (RPOs): Mandate states to procure RE, though targets often clash with local grid capability.
• Green Open Access Rules (2022): Allow industries to directly purchase renewable power, bypassing discoms.
• National Green Hydrogen Mission: Positions hydrogen as a long-term storage solution and clean fuel.
• PLI for batteries and India Semiconductor Mission: Support indigenous storage manufacturing.