Renewables Dominate India’s Power Landscape: 4Q 2023 Overview

By Editor


In the final quarter of 2023 (October–December), India witnessed a significant surge in its power generating capacity, with a total addition of 2,893 megawatts (MW), Institute for Energy Economics and Financial Analysis (IEEFA) said.

Renewables dominated this expansion, constituting 74.8 percent of all new capacity. As a result, India’s cumulative power generation capacity soared to 428.3 gigawatts (GW) by the close of December 2023, the report from said.

Breaking down the renewable energy additions, wind and solar energy took the lead, contributing 19.1 percent and 53.2 percent, respectively, to the overall capacity introduced during the quarter.

However, coal power also saw a net increase of 730MW during 4Q, elevating the total installed coal power capacity to 214.4GW, representing 50.1 percent of the nation’s total installed power generation capacity. This boost was attributed to the commissioning of Unit 8 (800MW) at APGENCO’s Dr. N Tata Rao thermal power station.

A notable development was the addition of 60MW of Large Hydro power generation capacity, marking the first increase in six quarters. This growth was spurred by the commissioning of both units (2x30MW) at SJVN’s Naitwar Mori hydroelectric project in Uttarakhand.

On the annual front, renewable energy generation experienced a marginal uptick of 0.39 percent in the 12 months of 2023, reaching 358.62 billion units (BU), compared to 357.23 BU in the same period in 2022. However, this growth was restrained by a 15.4 percent decline in large hydro power generation.

In contrast, power generation from fossil fuel sources surged by 8.8 percent in 2023 to 1,295 BU from 1,190 BU in 2022, primarily due to a government directive to operate imported coal-based power plants at full capacity to meet rising demand. Overall power generation from all sources rose by 6.6 percent to 1,701 BU in 2023.

Examining capacity installations in the entire year of 2023, there was a 6.0 percent increase to 17,961 MW compared to 16,950 MW in 2022. Major contributors to this growth were solar, coal, and wind power capacity additions.

Solar power, accounting for 55.8 percent of total additions, experienced a decline of 28.2 percent year-over-year due to project commissioning delays linked to uncertainties surrounding the Approved List of Models and Manufacturers (ALMM) policy.

In contrast, wind power capacity additions increased by 51.9 percent in 2023, driven by hybrid tenders and the Ministry of Power’s wind power obligation until 2029-30.

Despite these positive strides, total renewable energy capacity additions in 2023 fell by 20.3 percent to 13,046 MW from 16,360 MW in 2022. This setback poses a challenge for India’s ambitious goal of achieving 500GW of non-fossil fuel power capacity by 2030, requiring an annual installation of 40.7GW from 2023 onwards. However, the actual non-fossil fuel power capacity added in 2023 was only 13,746 MW, falling short by 66 percent of the targeted amount.

Coal power capacity additions showed robust growth in 2023 (4GW vs. 0.6GW in 2022), driven by escalating electricity demand and record peaks in the country.

Solar, wind, and coal remain pivotal to capacity additions across quarters, except for a 700MW nuclear capacity addition in 2Q 2023. Solar capacity additions saw a significant drop from the peak of 4,650MW in 1Q 2022 to just 1,538MW in 4Q 2023, the lowest in the past eight quarters, attributed to lower auction volumes and supply chain challenges.

India witnessed four consecutive quarters of coal power capacity additions, totaling 4,001MW in 2023, in stark contrast to a net addition of merely 586MW in 2022.

In 4Q 2023, renewables constituted 75 percent of total capacity additions, with an average of 72 percent throughout 2023, a decline from the over 85 percent seen in 2022. This shift was driven by a slowdown in solar capacity additions and a concurrent increase in coal-based capacity.

Baburajan Kizhakedath

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