India's energy transition journey is showing progress. According to Ember, a UK-based think tank's latest report on Indian States' Electricity Transition (SET), 21 states across India exhibit some growth in renewables.
However, the performance differs drastically from one state to another.
States that have consistently adopted renewable energy
Among the states featured in the SET report, Gujarat and Karnataka stand out as the frontrunners in the energy transition in 2023 and 2024.
Karnataka ranks the highest in decarbonisation efforts influenced by its outperformance in the State Energy Efficiency Index, 2023.
The state also performs well in the energy mix compared to most of its peers. Although Karnataka has only realised 12% of its renewable energy potential, around 37% of the state's energy consumption comes from renewables.
Karnataka sustains limited emissions in the CO2 equivalent metric even on power sector emissions.
"Power sector emission intensity is calculated on a regressive parameter, meaning the lower the emission intensity, the better the state is performing, so it is producing lesser emissions in terms of just getting one unit of Gross State Domestic Product, and both the factors determine the intensity score,' Tanya Rana, Energy Analyst, Institute For Energy Economics And Financial Analysis (IEEFA), said.
While Gujarat's share of renewable energy is just 16.67%, the state is performing better than most states in terms of renewable energy investment.
According to data analysed for the SET report, the weighted average of Gujarat's expenditure on new and renewable energy sources from 2019 to 2023 is 9.65%.
However, state finances alone are not driving the investment in renewables. Private companies account for most of the investments in renewable energy.
"We observe that it is usually not state governments that set up and invest in these power plants. We have companies with a lot of equity-based investment in the sector," Neshwin Rodrigues, Electricity Policy Analyst, Ember, said.
It's not just Gujarat's state expenditure shaping its accelerated energy transition. It also beats the majority of states with a renewable energy capacity addition of 11951.69 MW from 2020 to March 2024.
Similarly, Gujarat's distribution company (DISCOM) has received the highest rating from the Power Finance Corporation. The state has also managed to limit its power shortages to nearly just 0.03% in FY23, influencing its overall ranking in the report.
The status of power ecosystems
The SET report further delves into the functioning of power ecosystems across states on factors showing facilitation to the energy transition, infra and grid efficiency.
Delhi overtakes Gujarat in this metric for various reasons despite scoring low on DISCOM performance.
Delhi does particularly well in the adequacy of power supply and the uptake of distributed solar energy.
In FY23, Delhi completed most of its power requirements while falling short of 2 million units.
As of February, rooftop and off-grid solar have a major chunk of around 71% of total renewable energy installed in Delhi.
However, Delhi needs more short-term market participation. In FY23, only 34% of overall power purchase and captive generation volume was traded in the short-term electricity market.
Similarly, Delhi could only fulfil around 12% of its installed renewable energy December 2022 target, which is set by the Ministry of New And Renewable Energy (MNRE).
Apart from Gujarat which largely manages its position in this metric due to its strong DISCOM performance, Haryana manages to retain its third spot in the overall ranking as well as its power ecosystem readiness.
Haryana ensured an adequate power supply in FY23 with 0.8% of shortages.
The state also saw the highest distributed solar energy penetration after Delhi, which came in at 63.6% as of February 2024.
Despite scoring high on decarbonisation, Karnataka and Rajasthan fall short in the uptake of distributed solar energy.
As of February 2024, Rajasthan and Karnataka accounted for 6.42% and 7.14% of their rooftop and off-grid solar installed energy capacity.
Interestingly, Odisha scores the highest in green tariffs, renewable energy policy landscape and green open access rules.
The state has the lowest green tariff rate, 25 paise per kilowatt hour, compared to its peers. Odisha is also making significant strides in its Electric Vehicle (EV) ecosystem.
It ranks the highest of the 21 states included in the report for its EV policy, which scores well on factors like providing financial and non-fiscal incentives, charging infra subsidies and battery swapping policies.
Similarly, Karnataka secures the second spot in this metric with a low green tariff rate and a robust renewable energy policy landscape. However, the state loses out in storage capacity addition.
Maharashtra, which doesn't score high in other metrics in the report, has climbed the ladder in this metric for its energy transition market.
Maharashtra has successfully adopted an open access rule with a high score on that parameter.
Then, it has an incremental green tariff rate of 66 paise per kilowatt hour, which is good compared to many other states.
Maharashtra also has an operational and functional pumped hydro storage capacity of 400 megawatts. "All these factors have pushed the state's ranking higher in the metric," Rana said.
While the adoption of EVs is touted as a major driver for the energy transition, only Delhi has performed well on the metric of developing an EV ecosystem. As per data analysed in the SET report, the state had the highest EV adoption rate of 10.6 in FY22-23.
Similarly, Uttarakhand, which didn't feature as a top performer in decarbonisation and readiness of the power ecosystem, came in fifth place in the market enablers list.
Uttarakhand has a green tariff of 26 paise per kilowatt hour as of December 2023, the second-lowest after Odisha.
The state also has a strong renewable energy policy and has adopted Green Open Access Rules (GOARs), fuelling its position in the tally.
On the other hand, Kerala is one of the top performers in the other two metrics and slips to one of the lowest scorers as market enablers.
As of May 2023, Kerala had no storage capacity addition and no renewable energy policy. The state also has not adopted any GOARs as of February 2024. Kerala also has a moderate green tariff of 77 paise per kilowatt hour as of December 2023.
Energy Transition Needs An Upgrade
Most states analysed in the SET report signify a need to refine green transition efforts.
For example, except Himachal Pradesh and Uttarakhand, almost all states have less than 40% share of renewables in their energy mix.
The low share of renewable energy is also reflected in capacity additions.
Two states, namely, Rajasthan and Gujarat have successfully added 15,567 megawatts (MW) and 11,952 MW renewable energy capacity respectively from 2020 up to March this year, which other states have been unable to replicate.
"We do need to understand that the aspirations that we have set are quite high. And if we look at the targets, we need to probably address some of the aspects that might slow down the growth rate required to reach them. So, just to put some context, India adds roughly around 13 GW of solar energy every year to meet the target for 2031-32. We need to add 36 gigawatts annually or even more than that. And, our performance with wind has been even much lower. So we need to continuously add more and more renewables," Rodrigues said.
Similarly, state expenditure on renewable energy has been skewed across most states.
Chhattisgarh is the only state to score high on state expenditure on renewable energy, significantly improving its performance from last year's SET report.
However, most investments in developing renewable energy sources emanate from private players. Short-term market participation also needs improvement across states.
Iterations of the SET report have consistently shown that Jharkhand, Bihar, West Bengal and Uttar Pradesh have shown slow progress in most metrics.
Most of these states in the Northwest and East India have an affinity to harsh temperatures annually in summer and need to use the availability of solar power to their advantage.
Still, India's renewable energy market presents a huge opportunity. According to Ember's Global Electricity Review (GER) 2024, India overtook Japan to become the third-largest solar power generator with 113 TWh produced.
However, the country's dependency on coal hasn't reduced, with India producing the second-highest electricity from coal in 2023. This has eventually led to an increase in India's power sector emissions by 7.2% in 2023 from 2022.
Severe droughts across parts of the country also led to a fall in the country's hydro generation in the second half of 2023 compared to 2022.
The GER report points out that India's power sector emissions are likely to rise further until renewable energy sources grow fast enough to meet the high electricity demand.
However, the performance differs drastically from one state to another.
States that have consistently adopted renewable energy
Among the states featured in the SET report, Gujarat and Karnataka stand out as the frontrunners in the energy transition in 2023 and 2024.
Karnataka ranks the highest in decarbonisation efforts influenced by its outperformance in the State Energy Efficiency Index, 2023.
The state also performs well in the energy mix compared to most of its peers. Although Karnataka has only realised 12% of its renewable energy potential, around 37% of the state's energy consumption comes from renewables.
Karnataka sustains limited emissions in the CO2 equivalent metric even on power sector emissions.
"Power sector emission intensity is calculated on a regressive parameter, meaning the lower the emission intensity, the better the state is performing, so it is producing lesser emissions in terms of just getting one unit of Gross State Domestic Product, and both the factors determine the intensity score,' Tanya Rana, Energy Analyst, Institute For Energy Economics And Financial Analysis (IEEFA), said.
While Gujarat's share of renewable energy is just 16.67%, the state is performing better than most states in terms of renewable energy investment.
According to data analysed for the SET report, the weighted average of Gujarat's expenditure on new and renewable energy sources from 2019 to 2023 is 9.65%.
However, state finances alone are not driving the investment in renewables. Private companies account for most of the investments in renewable energy.
"We observe that it is usually not state governments that set up and invest in these power plants. We have companies with a lot of equity-based investment in the sector," Neshwin Rodrigues, Electricity Policy Analyst, Ember, said.
It's not just Gujarat's state expenditure shaping its accelerated energy transition. It also beats the majority of states with a renewable energy capacity addition of 11951.69 MW from 2020 to March 2024.
Similarly, Gujarat's distribution company (DISCOM) has received the highest rating from the Power Finance Corporation. The state has also managed to limit its power shortages to nearly just 0.03% in FY23, influencing its overall ranking in the report.
The status of power ecosystems
The SET report further delves into the functioning of power ecosystems across states on factors showing facilitation to the energy transition, infra and grid efficiency.
Delhi overtakes Gujarat in this metric for various reasons despite scoring low on DISCOM performance.
Delhi does particularly well in the adequacy of power supply and the uptake of distributed solar energy.
In FY23, Delhi completed most of its power requirements while falling short of 2 million units.
As of February, rooftop and off-grid solar have a major chunk of around 71% of total renewable energy installed in Delhi.
However, Delhi needs more short-term market participation. In FY23, only 34% of overall power purchase and captive generation volume was traded in the short-term electricity market.
Similarly, Delhi could only fulfil around 12% of its installed renewable energy December 2022 target, which is set by the Ministry of New And Renewable Energy (MNRE).
Apart from Gujarat which largely manages its position in this metric due to its strong DISCOM performance, Haryana manages to retain its third spot in the overall ranking as well as its power ecosystem readiness.
Haryana ensured an adequate power supply in FY23 with 0.8% of shortages.
The state also saw the highest distributed solar energy penetration after Delhi, which came in at 63.6% as of February 2024.
Despite scoring high on decarbonisation, Karnataka and Rajasthan fall short in the uptake of distributed solar energy.
As of February 2024, Rajasthan and Karnataka accounted for 6.42% and 7.14% of their rooftop and off-grid solar installed energy capacity.
Creatingg markets for energy transition
Interestingly, Odisha scores the highest in green tariffs, renewable energy policy landscape and green open access rules.
The state has the lowest green tariff rate, 25 paise per kilowatt hour, compared to its peers. Odisha is also making significant strides in its Electric Vehicle (EV) ecosystem.
It ranks the highest of the 21 states included in the report for its EV policy, which scores well on factors like providing financial and non-fiscal incentives, charging infra subsidies and battery swapping policies.
Similarly, Karnataka secures the second spot in this metric with a low green tariff rate and a robust renewable energy policy landscape. However, the state loses out in storage capacity addition.
Maharashtra, which doesn't score high in other metrics in the report, has climbed the ladder in this metric for its energy transition market.
Maharashtra has successfully adopted an open access rule with a high score on that parameter.
Then, it has an incremental green tariff rate of 66 paise per kilowatt hour, which is good compared to many other states.
Maharashtra also has an operational and functional pumped hydro storage capacity of 400 megawatts. "All these factors have pushed the state's ranking higher in the metric," Rana said.
While the adoption of EVs is touted as a major driver for the energy transition, only Delhi has performed well on the metric of developing an EV ecosystem. As per data analysed in the SET report, the state had the highest EV adoption rate of 10.6 in FY22-23.
Similarly, Uttarakhand, which didn't feature as a top performer in decarbonisation and readiness of the power ecosystem, came in fifth place in the market enablers list.
Uttarakhand has a green tariff of 26 paise per kilowatt hour as of December 2023, the second-lowest after Odisha.
The state also has a strong renewable energy policy and has adopted Green Open Access Rules (GOARs), fuelling its position in the tally.
On the other hand, Kerala is one of the top performers in the other two metrics and slips to one of the lowest scorers as market enablers.
As of May 2023, Kerala had no storage capacity addition and no renewable energy policy. The state also has not adopted any GOARs as of February 2024. Kerala also has a moderate green tariff of 77 paise per kilowatt hour as of December 2023.
Energy Transition Needs An Upgrade
Most states analysed in the SET report signify a need to refine green transition efforts.
For example, except Himachal Pradesh and Uttarakhand, almost all states have less than 40% share of renewables in their energy mix.
The low share of renewable energy is also reflected in capacity additions.
Two states, namely, Rajasthan and Gujarat have successfully added 15,567 megawatts (MW) and 11,952 MW renewable energy capacity respectively from 2020 up to March this year, which other states have been unable to replicate.
"We do need to understand that the aspirations that we have set are quite high. And if we look at the targets, we need to probably address some of the aspects that might slow down the growth rate required to reach them. So, just to put some context, India adds roughly around 13 GW of solar energy every year to meet the target for 2031-32. We need to add 36 gigawatts annually or even more than that. And, our performance with wind has been even much lower. So we need to continuously add more and more renewables," Rodrigues said.
Similarly, state expenditure on renewable energy has been skewed across most states.
Chhattisgarh is the only state to score high on state expenditure on renewable energy, significantly improving its performance from last year's SET report.
However, most investments in developing renewable energy sources emanate from private players. Short-term market participation also needs improvement across states.
Iterations of the SET report have consistently shown that Jharkhand, Bihar, West Bengal and Uttar Pradesh have shown slow progress in most metrics.
Most of these states in the Northwest and East India have an affinity to harsh temperatures annually in summer and need to use the availability of solar power to their advantage.
Still, India's renewable energy market presents a huge opportunity. According to Ember's Global Electricity Review (GER) 2024, India overtook Japan to become the third-largest solar power generator with 113 TWh produced.
However, the country's dependency on coal hasn't reduced, with India producing the second-highest electricity from coal in 2023. This has eventually led to an increase in India's power sector emissions by 7.2% in 2023 from 2022.
Severe droughts across parts of the country also led to a fall in the country's hydro generation in the second half of 2023 compared to 2022.
The GER report points out that India's power sector emissions are likely to rise further until renewable energy sources grow fast enough to meet the high electricity demand.
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