India may slash thermal power dependence by half, soon! Focus shifts on green energy

Thermal energy currently accounts for 63% of India’s total installed capacity which is identical to the global value.

India may be able to slash its dependence on thermal power by half by soon as focus has shifted to renewable energy in the power sector. “India is chasing ambitious Renewable Energy (RE) targets and enhancing its T&D infrastructure. Increasing RE use is decreasing dependence on coal. Contribution of thermal sector to reduce to nearly 50% by FY22 and almost 43% by FY27,” a report by Praxis Global Alliance on ‘How India’s power sector will rebound from COVID-19 crisis’, said on Tuesday. Further, existing private players in the thermal power sector have been finding it difficult to raise money from financial institutions due to their current financial health and their contribution is also declining.

Thermal energy currently accounts for 63% of India’s total installed capacity which is identical to the global value. However, the private sector in the thermal sector is financially constrained. With the private sector being cash-strapped, a majority of the ongoing projects have been stalled while almost 6% for central and state government are stuck. New capacity addition has declined with stuck projects and the country’s installed capacity project has also stagnated, largely driven by the decline in new thermal capacity expansion.

On the other hand, the incremental growth in the power sector is being driven by expansion in Renewable Energy. “Power sector is going through a change in mix, where a large share of the incremental growth is driven by Renewable energy. Renewable sector is largely dominated by private companies with the three developers accounting for nearly 30% of the share,” the report said.

Meanwhile, the power sector is likely to bounce back to pre-coronavirus level only in the next year. “Fundamental demand across generation, transmission, and EPC in the sector is expected to be back to normal by March 21,” the report said. Companies are expected to bear the brunt of scarcity in manpower and low raw material availability which is likely to impact in medium-term.