Outlook for renewable energy industry in 2023: Opportunities and Challenges
In 2023, the renewable energy sector is expected to maintain growth and achieve desired figures, and cash flow, technology upgradation and government’s support with futuristic measures will be the major factors driving growth.
India accentuated on accelerating renewable energy production, manufacturing necessary equipment, and constructing energy storage facilities in 2022 in a bid to stride big towards the accomplishment of the 500 GW renewable energy target by 2030. The country today has more than 170 GW of renewable energy installed capacity and several projects with a total capacity of 80 GW are under various stages of development. It needs to further increase its focus on renewables in 2023 and beyond to achieve ambitious developmental and environmental goals including net-zero by 2070. It must strive to add around 25-30 GW this year to its existing capacity.
The New Year 2023 seems promising for the sector, which will thrive in a conducive environment. The anticipation is that the sector will witness an enormous investment of around USD 25 billion 1 this year that will give a further boost to energy generation plans and strategies.
Forecasts for 2023
The solar segment is expanding faster as compared to other segments and is expected to not only sustain its growth but also give it further momentum this year. However, India needs to stimulate the progress of every segment equally and harness its full potential in wind, green hydrogen and other segments. The onshore and offshore wind energy capacity is expected to rise.
Furthermore, the energy storage capacity will increase, resulting in an improvement in the resilience of the decentralised power network. Cutting-edge storage technologies will be adopted and implemented at a faster pace, resolving storage issues of the sector and encouraging different RE segments.
Most importantly, a surge in investment from companies in renewable energy technology is expected. Carbon capturing and sequestration techniques will be the major focus of organisations as they would endeavour to diversify their portfolios in the New Year.
owever, there are some hurdles as well that hamper the growth of the sector. They need government intervention with appropriate steps and measures.
Challenges and solutions
Today the wind segment is struggling with the continuous reduction in tariffs and this may halt the projects that are under construction. Besides, the pressure to cut down costs and upgrade turbine technology affects the balance sheet of producers. Similarly, the green hydrogen segment is facing a daunting challenge in production due to the high import duty on electrolytes. The government must think about a national level tariff policy and a reduction in import duty on electrolytes.
Also, the high interest rates, which are in the range of 8-10% create hindrances for the industry. This affects the tariff and makes energy expensive for consumers. A decrease in the interest rates will help the industry arrange adequate funds and offer energy at a cheaper cost.
Additionally, land acquisition, which is a crucial aspect of renewable energy generation is a tough task today and demands attention. The severity of the issue can be understood by the fact that, sometimes, it becomes a major reason behind the delay in project execution. India needs a simple and transparent land transfer system to ensure quick project implementation.
Furthermore, the poor financial standing of discoms is also hampering the growth of the RE sector. They purchase power, but their payment cycle is not regular which affects the financial condition and operations of energy producers. Fixing discoms problems has become quintessential to ensure smooth project operations.
In the New Year 2023, the renewable sector is expected to maintain growth and achieve desired figures. Cash flow, technology upgradation and government’s support with futuristic measures will be the major factors driving growth. However, the market condition and global affairs will also affect the progress and decide the course. But, concerted efforts of all the stakeholders, robust strategies and reliance on indigenous methods and technologies will help India give swiftness to its green energy transition objectives.