Shift of renewables to the East

Renewable energy in the world has gone through a major transformation in the past five years. In the current decade, renewables are set to establish a firm foothold in the global energy generation sphere. The rising concerns on fossil fuel use and the global efforts to tackle climate change are pushing nations towards adopting cleaner sources of energy in their electricity generation mix.

The year 2013 marked a turning point in new global power capacity additions when more renewable energy installations (143 GW) were seen compared to conventional sources (141 GW). This positive trend will continue as the share of renewables in the globally installed base is expected to grow from 6% in 2010 to 14% in 2020, signifying the fact that they are here to stay.

More and more countries are coming up with new renewable energy installations, which is evident from the fact that the number of countries with renewables in their power generation mix has gone up from 117 in 2010 to 133 in 2014. Interestingly, 90% of the current global capacity remains concentrated among the top-20 countries. The developed nations of Western Europe are moving towards advanced technologies like offshore wind energy while the developing economies like China and India will accelerate developments in proven technologies like onshore wind and solar energy. These countries will drive the accelerated growth of renewables towards 2020 based on their national targets and climate change obligations.

Historically, the initial growth in renewable energy was primarily significant in the "western cluster" comprising Europe and North America. However, in the past five years, the "eastern cluster" comprising China and India has carried out new capacity installations with greater momentum than the western cluster. With recently revised national renewable energy targets of the two nations, 405 GW of China (by 2020) and 175 GW of India (by 2022), their combined installations are expected to increase by 160% in the 2014-2020 period. It is estimated that China and India combined will have a 47% share of the global renewable energy installed capacity by the end of the decade, up from 30% in 2014. This large-scale development is expected to have a positive impact on the cost of energy, which is expected to decrease due to factors like technology maturity, supply chain efficiency and evolving policy support schemes. Post 2020, as renewables become a cheaper alternative to conventional coal and fossil fuels, this shift of the cleantech cluster from west to east will be reinforced as installations gain further momentum.

This report pays special attention to assessing the Indian renewables market as the next big investment destination for global players. India has recently increased its targets for solar energy to 100 GW by 2022 from 4 GW by 2017; and concerning wind energy, the target has been raised to 60 GW by 2022, up from 27.3 GW by 2017. With a cumulative renewable energy capacity target of 175 GW by 2022, India has a massive development potential of 144 GW, from the 31 GW of total installed capacity in 2014. In addition, with decreasing costs of electricity generation from renewables and increasing support from the government, India will become the hotspot for renewable energy investments in the next five to seven years. Technologies like rooftop solar PV energy and onshore wind energy are expected to achieve grid parity levels before the end of the decade. The government is also building policy-based support at various levels of manufacturing, financing, project development, T&D infrastructure and demand generation to accelerate renewable energy project development. This report also offers a thorough evaluation of the demand and supply scenario and financing developments for new solar and wind energy project realisation in the country.

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