According to reports, India is known for setting ambitious development goals and then missing them by a margin that might be laughable if it weren’t so serious. Case in point: Seven years ago, the slogan ‘Power for All by 2012,’ became national policy. Today, India has 288 million people living without electricity access, according to a November 2011 International Energy Agency report.
Renewable energy offers an exception to India’s history of overpromised goals.
The nation overshot its installation target by 100 percent just two years after “Power for All” became policy. Since then, renewable energy in India has been growing quickly. In March 2007, India had 10.2 GW of renewable energy. That more than doubled by the end of 2011, to over 22 GW accounting for 11% of India’s power generation capacity. Bloomberg New Energy Finance tracks money flowing into projects, venture capital and private equity deals, and public market fundraising. We found that India led nations in the growth of renewable energy investment in 2011, with a 52 percent jump to $10.3 billion, helped by a growing wind sector and accelerating solar market.
The Western press has acknowledged for several years the first wave of Indian businessmen who made it big in renewables, typified by Tulsi Tanti, founder of wind-turbine giant Suzlon. Now, a new class of entrepreneurs is targeting rural poor lacking power and cities thirsty for more. For example, Selco provides solar lighting to rural areas without electricity. It’s led by Harish Hande, 2011 winner of the prestigious Magsaysay Award, given to individuals who help address systemic poverty, poor health and lack of opportunity in Asia. Gyanesh Pandey runs Husk Power Systems, which generates power using decentralized small- scale plants and sells it at low rates to rural households. Since 2009, it has raised $400,000 to $1.3 million from investors like Shell Foundation, Draper Fisher Jurvetson and the International Finance Corporation. Sumant Sinha left Suzlon to form ReNew Wind Power, which hopes to build a gigawatt of generation capacity by 2015. Goldman Sachs bought majority stake in the company for 10 billion rupees ($200 million) in September 2011.
These examples suggest the initial challenges facing renewable energy in India have largely been overcome. Generation needed to become cheaper, efficient and scalable. It has. Now, Indian power distributors have become the key roadblock in the growth of renewables. The grid must be modernized to withstand more large-scale connected projects. Power distribution companies are the main buyers of renewable power and their financial health is deteriorating rapidly. Fixing this new set of problems will mean overhauling the existing system. Perhaps grid modernization can follow the success of renewable energy and not the fantasy of “Power for All.”
Inflation, high interest rates and other factors stand in the way of growth, too. But the $4.2 billion India invested in solar in 2011 is reassuring for this relatively new sector. This year will mark an inflection point in India’s renewable energy growth story.