Economic Survey: Non-fossil fuel energy capacity expected to triple by FY30

To achieve target for installed capacity, it will have to grow at CAGR of 16.25%

The Economic Survey 2022-23, which was tabled in Parliament on Tuesday, projected that India’s average emission rate would decline by 29 per cent by financial year 2029-30 (FY30), compared with FY15 levels. The CO2 emissions rate in FY15 was 0.73 kg per kWh (kilowatt-hour), which declined to 0.71 kg per kWh in FY18, and is expected to reduce further to 0.51 kg per kWh by FY30.

This reduction has been driven by India’s changing energy mix. The Survey says India’s optimal electricity generation capacity is expected to exceed 800 Gw by FY30. About two-thirds of this, or 500 Gw, would come from non-fossil fuel sources — almost three times more than the current installed capacity.

As of December, non-fossil fuel energy sources accounted for 174.53 Gw of the 410.33 Gw of installed electricity capacity. To achieve their targets for the installed capacity in the next eight years, non-fossil fuels will have to grow at a compound annual growth rate (CAGR) of 16.25 per cent. A Business Standard analysis shows that the addition of installed capacity in non-fossil fuel energy sources slowed between FY17 and FY22 and capacity addition grew at a CAGR of 8.53 per cent in those years. The CAGR touched a peak of 14.54 per cent between FY12 and FY16.

India has already achieved its earlier non-fossil fuel installation targets of 40 per cent in the initial nationally determined contributions submitted in 2015 which envisaged meeting that target by 2030.

However, even though the share of non-fossil fuels in installed capacity increased from 33.19 per cent in FY17 to 40.90 per cent in FY22, its share in electricity generation inched up from 19.58 per cent to 24.90 per cent during the same period.

Additionally, the Economic Survey points out that after a dip in renewable energy investments in 2020 because of the Covid-19 pandemic, investments in renewables have picked up. Investments worth $11.3 billion were made in India in 2021, almost double the $6.6 billion invested in 2020 and higher than the pre-pandemic level of $9.6 billion in 2019.