Decentralised renewables set for 70% annual growth in India, says Goldman Sachs

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

The market for decentralised renewable energy in India could be worth more than US$150 million by 2018, while around 5 million residential solar systems are predicted to be sold in the country between last year and 2018, according to a new report.

The report, “The business case for off-grid energy in India”, authored by non-profit organisation The Climate Group and investment bank Goldman Sachs, argues that using low carbon, off-grid renewable electricity and therefore being nearer the generation source can reduce transmission losses, as well as providing price stability and energy security. Its writers attempted to “identify promising off-grid energy business models with the greatest potential for scale-up”.

In doing so, the report looks at the questions of how best to connect the rural populations which currently lack access to electricity and how best to assess the demand for electricity of those rural populations in order to meet it. The report’s authors examined various renewable energy options for off-grid electrification, but concluded that the vast majority of off-grid utilities – as much as 80% – will be run off solar.

For instance, solar lamps have become an increasingly popular way for non-government organisations (NGOs) and charities to support remote communities. The SolarAid charity launched in Africa by UK developer Solarcentury replaces dangerous and polluting kerosene lamps with cheaper solar alternatives, with the goal of eradicating the kerosene lamp from African society by 2020.

The new report predicts that in India, solar lamps or lanterns will have a market penetration of 35% in the currently underserved market by 2018, a figure which stands at 5% today. However, the report argues, solar lanterns can only meet the most basic electricity needs of households, to provide lighting and phone charging, something which is likely to change as consumers take their first steps onto the “energy ladder”.

“Today, a customer with no prior access to electricity is willing to pay for just basic lighting and mobile charging, but tomorrow that same customer is likely to want to move up the energy ladder and use higher wattage appliances like fans and TVs,” the report says.

This and other drivers are likely to lead to the higher sales of home solar energy systems, with the overall market for decentralised renewable energy predicted by The Climate Group to be worth “at least US$150 million” by 2018. Currently serving 100,000 households in India, this market will expand its reach to 900,000 households by that date, the group claims. This represents an annual growth of 60% to 70%.

While grid connectivity will improve, at its current rate of expansion this would still leave around 70 to 75 million households without basic access to electricity by 2024, the report predicts.

In a blog last year for PV Tech’s sister site, PV Tech Storage, Dr Rahul Walawalkar of the India Energy Storage Alliance explained that there is likely to be a two-tiered approach to electrification for India. On the one hand, around 400 million Indian people currently lack even basic electricity access, Walawalkar wrote, while there is also a growing middle class population of around 300 million that “that is looking for the same level of energy access and power quality as enjoyed by people in developed countries”.

Walawalkar said his organisation was “excited” by government plans for the energy sector, which included a target for 100GW of solar by 2020 and a microgrid-building programme. Walawalkar said the next 10 years in India would represent an “energy infrastructure transformation”.

“We are excited by the steps taken by the new central government led by prime minister Narendra Modi and policy directives by Piyush Goyal, Minister for Energy, Renewable Energy and Coal,” Walawalkar wrote.

“The government has announced a number of key initiatives, such as 24/7 energy access for all, 100 smart cities, 10GW wind installations per year and 100GW of solar by 2020.”

The Climate Group/Goldman Sachs report, launched at the RE:Invest renewable energy conference in India, goes into regional details in its analysis and forecasts, and points out that more than half of the rural population currently lacking grid access is in five states of the country. As might also be expected from the Goldman Sachs-supported publication, it also looks at business cases for various technologies and where financing might come from, looking at a number of innovative new options for lending as opposed to traditional debt or equity products.

Greater affordability of home solar systems, coupled with rising consumer demand, will lead to greater competition in the space, the report predicts. However, while pricing new entrants into the market and meeting their demand with good quality products is important, The Climate Group argues, good customer relationships built up over time will be vital in persuading consumers to spend what is still likely to be a significant portion of their income on a solar system for their home.

“A good product is important but insufficient; enterprises need to develop long-term customer relationships,” The Climate Group argues.

“A SHS (solar home system) is a large purchase for a poor, rural household – even with financing. It is risky for them to spend so much money on a product they are not sure will work and with an enterprise they know very little about. Consumers are more likely to do future business with brands they know and trust.”

23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.
7 April 2022
Solarex Istanbul, Turkey’s first and unique exhibition on solar energy, provides a huge opportunity to Turkey on the way to being a solar energy hub. Solarex Istanbul will take place on 7-9 April 2022 for the 14th time. It will be a commercial platform to have the latest technologies and combination of new products from all around the world. It takes place annually at Istanbul Expo Center, Turkey. It is also called the most important platform for manufacturers, suppliers and dealers of the solar industry in Eurasia.

Read Next

January 28, 2022
Greek industrial group Mytilineos said its renewables and storage unit continues with “full speed” to invest in solar and battery energy storage systems globally following a 2021 that saw the business expand its PV engineering, procurement and construction (EPC) operations.
January 28, 2022
Indian independent power producer (IPP) ReNew Power has sold its 117MW rooftop solar portfolio as part of a strategy to heighten its focus on utility-scale PV.  
January 28, 2022
Global investment in renewables rose to new heights in 2021 as solar and wind deployment surged, but total energy transition expenditure needs to triple in the coming years to get on track for net zero, according to new research from BloombergNEF.
January 28, 2022
LONGi has raised its wafer prices for a second time in just over a month as hopes of falling costs fade and China shuts down for a week for its annual Luna New Year holiday.
January 27, 2022
Renewables owner and operator Brookfield Renewable has tripled its US development pipeline to 31GW through the US$650 million acquisition of clean power developer Urban Grid.
January 27, 2022
Hecate Energy’s first stage application for a 500MW solar PV plant in the state of New York has been accepted by the newly formed New York State Office of Renewable Energy Siting (ORES).

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal
Solar Media Events
April 25, 2022
Berlin, Germany