India's renewable energy future

Thermal power includes power produced from fossil fuels such as coal, gas, diesel or nuclear energy. A closer look shows that coal, currently, is the predominant fuel type in the sector. Coal based power plants account for nearly 60 percent of the total installed capacity.

Exhibit 1: Installed Power Generation Capacity

Large hydro power plants are second in terms of installed power capacity. Renewable energy is next with 13.5 percent, while nuclear energy forms a minimal 2.1 percent. However, with the Government of India's massive expansion plan for renewables, renewable energy would overtake large hydro in the next 1-2 years, in terms of installed power generation capacity.

The breakup is quite different if we consider the actual energy generation. Out of total energy generated (approximately 1.1 Trillion units), thermal energy contributes to around 80 percent of total energy generated in India, while large hydro and renewable energy contribute around 12 percent and 5-6 percent, respectively.

Going forward, renewable energy is expected to record the fastest growth in India. The Government has ambitious plans of achieving cumulative installed capacity of 175,000 MW by 2022. Not just installed capacity, renewable energy is also expected to contribute 15 percent of the country's energy demand, which would reach 2 Trillion units by then.