India can halve electricity costs and reach net zero before 2050, according to new report from Wärtsilä

India can halve electricity costs and reach net zero before 2050, according to new report from Wärtsilä
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Hyderabad: India can cut its overall cost of electricity in half and reach net zero before 2050 by developing a 100% renewable energy power system, according to modelling by global technology company Wärtsilä and the Finnish Lappeenranta-Lahti University of Technology.

The modelling shows a clear, actionable pathway to achieve a net zero electricity system that can bring enormous environmental and economic benefits to India, one of the world’s largest and fastest growing economies:

  • Increasing renewable energy from 25% today to 100% before 2050 cuts the cost of India’s electricity by 48%, from $88 USD per megawatt hour in 2020, to $46 USD in 2050.
  • A flexible 100% renewable system provides large levels of excess power that can address India’s rising energy dependency, forecast to double by 2030.
  • Increasing renewable energy could also generate major new revenues from hydrogen production, creating a technology market worth $39.8 billion USD.

The modelling makes a clear case for immediate action to accelerate the development of a 100% renewable energy system in India. By combining variable renewable power with energy storage and thermal balancing power plants capable of using carbon neutral sustainable fuels in the coming decade, India can dramatically cut its carbon emissions and halve the overall cost of its electricity.

Sandeep Sarin, Market Development Manager of India, Wärtsilä Energy, and co-author of the report, said, “This year, India will become the world’s fastest growing economy. Our modelling shows a path to a clean power system that will catalyse India's transformation into a global clean energy powerhouse; lifting millions from poverty, creating new jobs, insulating the system from energy shocks and simultaneously playing a vital role in limiting global temperature rises to below 1.5°C. India has a mountain to climb in reconfiguring its energy system for net zero, but it’s certainly possible with technologies that are already available at scale. With the right vision and planning, India can leapfrog developed nations into a sustainable future, but we must act now, before it’s too late.”

Wärtsilä’s ‘Front-loading Net Zero’ report sets out clear steps for India to decarbonise its power system:

  1. Set ambitious clean energy targets over longer-term time horizons to attract investors.
  2. Increase climate regulation for companies, including mandating consumers and power producers to meet a certain percentage of their requirements from renewable sources.
  3. Strengthen flexibility solutions, such as thermal balancing power plants and battery storage, that can raise the share of renewables.
  4. Launch an incentive programme for production of electrolysers (as capital costs are responsible for 30% of the cost of green hydrogen) and create new demand centres equipped to cost-effectively develop and transport green hydrogen.

As well as showing a path to an affordable clean energy transformation, the modelling also demonstrates the major planning challenge to cleanly meet energy demand as India’s population rises to around 1.7 billion by 2050.

Power demand is estimated to increase by 340% by 2050 – from 1,345 TWh in 2020 to 5,921 TWh in 2050, with 1,023 GW of peak demand. The modelling confirms India can affordably meet this demand through renewable energy, aided by solar energy prices that are amongst the lowest in the world, averaging around $26 USD per MWh[1].

However, to serve this increased load through mid-day peaks and to charge energy storage resources such as batteries to offset intermittent renewable energy generation, the total system capacity must be scaled up to an unprecedented degree:

  • 4,000 GW of installed capacity is needed for a 100% renewable system, a 10-fold increase on 2020.
  • New solar installations must rise by 885%, from 7 GW a year today, to 69 GW a year by 2035, rising to 79 GW a year between 2035 and 2050.
  • Solar would make up 76% (3,076 GW) of total capacity by 2050.
  • This would also be supported by a total wind capacity of around 410 GW by 2050, combined with hydro and carbon neutral gas.

Wärtsilä’s modelling shows that flexibility through energy storage is key to achieve the cost-optimal renewable baseload system – to shift generation when it is surplus, during the day, to times when renewables are not available, during evening or night-time. Thermal balancing power plants, backed by battery energy storage, must also be deployed to manage sudden surges in demand or drops in renewable generation.

To support a 100% renewable energy system in India:

  • Energy storage capacity must increase from almost zero to reach 99 TWh of storage capacity by 2050.
  • Storage output should cover 35% of India’s total demand by 2050, with 99% enabled by batteries.
  • 187 GW of fast-start load-following gas engines are needed to provide rapid grid balancing.

The report provides a wake-up call to leaders on the need for a comprehensive energy transition plan, underpinned by a long-term plan to deploy massively increased amounts of renewables, phase out coal, and dramatically scale up energy storage and flexible power system solutions.

Mr Anish De, Partner, Global Sector Head, Power & Utilities, KPMG National Head - Energy Natural Resources & Chemicals, KPMG in India, said, “India’s ambition and achievements on renewables are of an unparalleled scale. We have abundant resources for cheap and clean renewable energy – blessed with more than 300 sunny days a year – and our geography provides world-leading wind power. With some inventiveness, the right mix of new renewable generation and flexibility can replace coal and gas-fired power, creating a clean and more affordable system. This leaves a key question: is India better off committing itself whole heartedly to a renewable energy future? From every angle, the answer is yes.” 

Wärtsilä’s report also lays out the shifting role of gas power in India. The modelling shows that by 2050, thermal balancing power plants will have a relatively small, but crucial, back-up role, providing 1.1% of electricity generation. Thermal balancing power plants will play a crucial role in decarbonising the power system by shifting to carbon neutral, hydrogen-based sustainable fuels, such as synthetic methane, to generate electricity and help decarbonise the final 10% of India’s energy system. Wärtsilä engines are already capable of running on 25% hydrogen blends and the company expects to be capable of running 100% hydrogen by 2025. 

Håkan Agnevall, CEO and President of Wärtsilä, said, "Our modelling shows that it is viable for all energy systems to be fully decarbonised before 2050, and that accelerating the shift to renewable baseload, coupled with flexibility, will help economies to thrive. We have all of the technologies that we need to rapidly shift to net zero energy. The benefits of renewable-led systems are cumulative and self-reinforcing – the more we have, the greater the benefits – so it is vital that leaders and power producers come together now to front-load net zero this decade.”