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State of the Indian Renewable Energy SectorDrivers, Risks, and Opportunities

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September 2018 |

Citation: Manu Aggarwal and Arjun Dutt (2018) ‘State of the Indian Renewable Energy Sector: Drivers, Risks, and Opportunities’, September

Overview

This report analyses how the interplay between risks, policies, and market developments has shaped renewable energy capacity addition in India, and identifies gaps that need to be addressed.

As of 2017, India has the world’s fourth largest installed wind capacity and the sixth largest installed solar capacity. Investment flow into the renewable energy sector in India is the second highest among developing countries. India has instituted several policy measures to support renewable energy deployment, but actual capacity addition is contingent upon how these policy measures are able to address the various risks plaguing the sector.

This stocktake, which follows an analysis of clean energy investment trends in India, aims to aid policymakers, regulators, developers, and investors assess the extent of consistency between the current state of the sector and India’s clean energy ambitions, and identify the course corrections required to further the energy transition. It focuses on the solar and wind energy sectors, given their primacy in India’s renewable energy ambitions.

Solar and wind capacities grew faster post 2014-15

Source: Central Electricity Authority monthly installed capacity reports

Key Highlights

Utility-scale solar and wind:

  • Investors find the Indian renewable energy sector increasingly attractive, as evidenced by trends in renewable energy investments in India. Sectoral risks are lower, as reflected in the decline in auction-determined utility-scale renewable energy tariffs.
  • Policy-level interventions have reduced the uncertainty of demand, facilitated the setting up of supporting infrastructure, helped mitigate offtaker risk, and offered preferential treatment to renewables in the form of exemptions from inter-state transmission charges and must-run status.
  • Policy-related measures have been augmented by favourable market developments: declines in unit costs of PV modules and wind turbines; and favourable changes in the terms of financing.
  • Lower risk perception of renewable energy investments, supported by a favourable international financing environment have translated into more favourable terms of financing.

Solar rooftop:

  • Capacity addition has lagged behind in the underserved rooftop solar segment. Policy measures aimed at incentivising rooftop solar deployment have had implementational challenges at the discom level, and the flow of finance to the rooftop solar segment has been limited by the lack of bankability of projects. Public sector capital should be deployed in such ways in order to stimulate growth in such underserved market segments.

List of top Indian states by installed rooftop solar capacity (as of September 2017)

Source: Bridge to India

Existing and evolving risks:

  • There is considerable variation among states in the supportiveness of regulatory frameworks, financial health of discoms, and the future demand potential for electricity. These variations differentiate states in terms of attractiveness for investment.
  • The uncertainty surrounding the potential imposition of duties on imported PV modules has hampered investment, while the increased competitiveness of generation could lead to the withdrawal of support mechanisms such as the must-run status.
  • Stricter implementation of some existing policy measures is needed to raise their effectiveness. Additional interventions are needed to address major risks for RE capacity addition, particularly the challenge of RE integration.
  • In order to integrate greater RE capacity into the grid, T&D infrastructure, and scheduling and forecasting capabilities, need strengthening; and curtailment risk needs to be mitigated by robust contractual provisions and financial instruments.
While renewable energy capacity addition has increased over the past few years in India, existing and evolving risks need to be addressed to scale up deployment to the level of the country’s ambitions.

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Filling the Skill Gap in India’s Clean Energy MarketSolar Energy Focus

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February 2016 |

Citation: Arunabha Ghosh, Kanika Chawla, Neeraj Kuldeep, Anjali Jaiswal, Meredith Connolly, Nehmat Kaur, Bhaskar Deol, Sameer Kwatra (2016) ‘Filling the Skill Gap in India’s Clean Energy Market-Solar Energy Focus’, CEEW-NRDC Policy Brief, February

Overview

This report outlines the nature of skills essential for increasing renewable energy deployment in India (especially in the solar sector) and lays out a roadmap to upgrade these skills.

Released during the Make in India week held in February 2016, the analysis (in collaboration with the NRDC India) found that solar developers will need a multitude of skilled workers across every phase of a solar project. To reach 100 GW of solar by 2022, India would need nearly 2,10,800 skilled site engineers and approximately 6,24,600 semi-skilled technicians for construction, most of whom would be needed to achieve the targeted 40 GW rooftop solar capacity addition.

This brief was released along with a companion analysis of the skill gap in the wind energy sector in India.

Farm workers clean the solar panels for better efficiency in Karnal, India (Source: Prashanth Vishwanathan/IWMI)

Key Findings

  • India’s 100 GW solar target would generate more than 1.1 million jobs by 2022 spread across business development (2%), design and pre-construction (3%), construction and commissioning (72%), operations and maintenance (23%).
  • Around 81,000 highly skilled workers would be needed annually by 2022 to carry out annual and ongoing performance monitoring of solar projects.
  • An additional 1,82,400 workers would be needed annually by 2022 to carry out low-skilled operation and maintenance functions for solar rooftop and utility scale projects.
  • To reach the 40 GW target for rooftop solar by 2022, India needs around 2,10,800 skilled site engineers and approximately 6,24,600 semi-skilled technicians for construction.
  • One prominent challenge is the availability of appropriately skilled manpower. The solar sector would benefit from employing workers from conventional labour markets with relevant skill sets.
  • Other key challenges for the solar sector include a shortage of platforms to advertise for solar jobs, low salaries, lack of local proximity to training institutes, poor quality of existing training programs, etc.
  • The 65 GW wind target is projected to create a further 1,83,500 jobs across the various phases of wind deployment.
  • The wind sector is constrained by a lack of transferability of skills, which limits the movement of skilled workforce between industries. It also places more importance on in-house and on-the-job skilling,

Key Recommendations

  • Improve training and certification programs, which are accessible to workers of varying backgrounds and skill sets in all states.
  • Develop renewable energy training clusters near ongoing renewable energy projects.
  • Consider mobile training courses, and common platform and technology to achieve consistency in training programs
  • Examine industry needs and target skills most difficult to hire for, in training programs.
  • Seek employees in existing traditional fields to provide overlapping skills, in order to fill the gap quickly.
India’s 100 GW solar target would generate more than 1.1 million jobs by 2022 spread across business development (2%), design and pre-construction (3%), construction and commissioning (72%), operations and maintenance (23%).

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Filling the Skill Challenge Facing the Wind Industry

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February 2016 |

Citation: Council on Energy, Environment and Water, and Natural Resources Defence Council (2016) ‘Identifying the Skill Gap Challenge Facing the Wind Industry’ CEEW-NRDC Issue Brief, February

Overview

This brief, based on a survey of wind power producers, equipment manufacturers (wind turbine, tower, nacelle and hubs), engineering, procurement and construction (EPC) companies and turnkey solution providers, provides an assessment of the key skills required to fill jobs being generated in India’s wind energy sector.

India is the world’s fourth largest wind power producer, with over 25 GW of capacity operational at the time of the survey. Despite the rapid advancements and the relative maturity of the sector in India, data availability and collection pose a challenge to analysis. This survey, along with a companion analysis of the skill gap in the solar sector, was conducted in collaboration with the NRDC India.

A tower under construction at South Moor Wind Farm, UK (Source: Wikimedia Commons)

Key Highlights

  • The wind energy market in India is fairly concentrated, with much of the capacity being deployed by large developers such as Vestas India, Suzlon Energy, Gamesa Wind Turbines, Inox Wind, etc.
  • The survey identified the key skills required for each phase of deployment, including business development, manufacturing, construction and commissioning, operations and maintenance; and design and pre-construction.
  • Most of the skills required for each phase could be gained through technical diplomas or vocational training.
  • For the manufacturing phase vocational and in-house trainings are the main mode of training the workforce.
  • The sector as a whole is challenged by an unavailability of skilled people, even though respondents do not necessarily have trouble hiring.
  • The shortage of a skilled workforce could be attributed to existing trainings not meeting industry needs, the poor quality of training programmes, and the lack of enough suitable training institutes.
  • Given the maturity of the sector, companies have developed in-house training programmes which provide a bulk of the skilling for each phase of deployment.
  • With the exception of manufacturing, all other phases of deployment prefer to hire mid or senior level professionals.
  • The wind sector is also constrained by the lack of transferability of skills. The skills required in the wind industry are highly specialised and movement between industries is limited.
  • As the sector prepares to scale up, trainings will play an important role in streamlining operations and accelerating the pace of development.
The skills required in the wind industry are highly specialised and movement between industries is limited.

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Clean Energy Powers Local Job Growth in India

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February 2015 |

Citation: Arunabha Ghosh, Shalu Agrawal, Poulami Choudhury, Kanika Chawla, Anjali Jaiswal, Meredith Connolly, Bhaskar Deol, and Nehmat Kaur (2015) ‘Clean Energy Powers Local Job Growth in India’, CEEW-NRDC Interim Report, February

Overview

This interim report analyses the potential job growth in the renewable energy market in India. It finds that achieving India’s 100 gigawatt (GW) solar energy goal by 2022 could create as many as one million jobs. Achieving India’s proposed target of 60 GW of wind energy by 2022 would also generate an additional 180,000 jobs.

The projection, conducted with the NRDC India , finds that the project planning, construction, installation and operations required to meet this solar goal could generate these jobs in less than a decade.

The analysis also documents a growing need for more accurate tracking of job creation data. The analysis shows that because companies in India do not often report the number of jobs created by their projects, scant data exists on the economic impact of clean energy development on employment.

The Council updates its projections on jobs in the Indian renewables sector every year. Find the latest numbers here.

Job creation scenarios to achieve 100 GW of Solar Energy in India by 2022

Source: CEEW and NRDC analysis, 2016

Key Highlights

  • Scope of economic benefits of employment generated by India’s clean energy industries is unknown due to a lack of reporting by solar and wind companies.
  • The target of 100 GW of solar energy could generate 1 million jobs by 2022.
  • 183,500 jobs would be generated if India installed 60 GW of wind energy by 2022.
  • Rooftop solar projects are more labor-intensive and can create more jobs.
  • Innovative financing instruments such as green banks and bonds could help reduce the high cost of capital required to scale renewable energy projects.

Key Recommendations

  • Improve reporting of a project’s job creation numbers by solar and wind energy companies to match international business practices.
  • Promote distributed generation technologies such as rooftop and off-grid in addition to solar parks and large-scale projects.
  • Promote collaborations between government agencies and local companies on skills development to train the growing workforce.
  • Prioritise the availability of affordable capital through innovative financing interventions such as green banks and green bonds.
The target of 100 GW of solar energy could generate 1 million jobs in the Indian market by 2022.

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