This article is the third and concluding part of a three-part series of thought leadership on Energy Transition, authored by Anil Rawal. The Energy Transition series expounds on the role of six pillars on which global “Net Zero” ambitions would rest – Renewables, Battery Storage, Green Hydrogen, E-mobility, Distributed Energy Resources and Digitalization. In this composition, Anil Rawal shares insights on distributed energy resources (DERs) and digitalization.
The global energy system is presently undergoing a momentous transformation. Over the past decade, investments in various renewable energy sources have surpassed those in fossil fuels. In 2022, global investments in energy transition exceeded $1 trillion, marking a remarkable 31 per cent increase from the previous year. Despite this impressive progress, the current level of global investment in low-carbon technologies falls short of the pace required to achieve Net Zero emissions by 2050.
The Net Zero ambition necessitates an annual investment of $5.7 trillion until 2030. The World Energy Transitions Outlook 2023 proposes redirecting $1 trillion of the planned yearly investments in fossil fuels towards energy transition technologies. Total cumulative energy investments should reach $44 trillion by 2030, with a strong emphasis on enhancing energy efficiency, promoting electrification, and expanding the grid.
Accelerating the deployment of renewable energy sources such as solar and wind is imperative to significantly reduce carbon emissions. Renewable energy maintained its leading position in terms of investment in 2022. However, more must be done to achieve the 1.5°C climate goal. Globally, we need to add 1,000 GW of renewable power every year to triple the total renewable energy capacity by 2030. Achieving this would allow us to avoid 7 billion tonnes of CO2 emissions by 2030. Simultaneously, there is a pressing need to intensify the use of renewable energy in various end-use industries. Additionally, concerted efforts are necessary to replace coal power and gradually phase out fossil fuels.
In the course of this ongoing energy transition, a multitude of frontiers are emerging, propelling the transition from fossil fuels to more sustainable energy sources. Ranging from solar and wind power to green hydrogen, battery storage and EVs, these emerging frontiers are significantly reshaping how we generate, distribute, and consume energy.
Power of Distributed Energy Resources
Clean energy transition is underway globally to meet climate commitments, primarily driven by the widespread deployment of renewable energy technologies at the grid level. However, the leading think tanks emphasize that a more reliable, affordable, and sustainable energy transition, coupled with energy security, can be achieved by scaling up Distributed Energy Resources (DERs). Emerging DERs, such as solar photovoltaics (PV) rooftop, battery energy storage systems (BESS), and electric vehicles (EVs), are expected to play a significant role in this transformative trend. It is projected that by 2032, the global distributed energy generation market will reach $918.07 billion, with DERs contributing nearly 10 per cent to the total installed capacity.
In India, the realization of DER targets has been less successful. Out of the initial renewable target of 175 GW, solar rooftop was expected to contribute about 40 GW. However, solar rooftop installations struggled to reach even 10 GW. Several factors contribute to this suboptimal outcome — the lack of robust technical, regulatory, and commercial framework around DERs being the one important factor. Nevertheless, the country has recently refocused on DERs.
In 2018, India imposed a 25 per cent safeguard duty on solar cell and module imports to support domestic manufacturers. Additionally, a Production-Linked Incentive (PLI) scheme with an outlay of Rs.4,500 crore aims to promote the domestic manufacturing of high-efficiency solar PV modules. The electric vehicle market has also witnessed rapid growth, with global sales exceeding 10 million in 2022. India, too, has embraced EVs, aspiring to achieve 100% local production. Furthermore, India has made significant strides in battery storage, with recent government approval for Viability Gap Funding (VGF) to develop 4,000 MWh of Battery Energy Storage System projects by 2030-31.
As DER adoption and integration increases, it becomes crucial to modernize our grids, many of which have been operational for decades and require upgrades for improved system flexibility. Without proper integration, the DER technologies pose challenges for distribution utilities and power system infrastructure. Digitalization at the consumer and distribution network levels offers a solution. In India, the government launched the Revamped Distribution Sector Scheme (RDSS), ensuring smart metering and grid strengthening of the local grids. The first crucial step remains to be the successful implementation of the Smart Metering National Programme, to form a robust foundation for Smart Grid and grid digitalization.
Digitalization: Key pivot for Transition to Clean Energy
Digital technologies are set to play a pivotal role in ushering the era of clean energy. Solutions such as internet of things (IoT) devices and big data analytics have proven their ability to enhance efficiency and reduce emissions aided by the cutting-edge technologies like digital twins, artificial intelligence (AI), and machine learning (ML), which offer promising avenues for decreasing carbon footprints, while blockchain technology can foster reliable and transparent carbon trading.
Hardware and software solutions constitute the spectrum of digital technologies. On the hardware front, smart meters, digital substations, smart electric vehicle (EV) charging infrastructure, digital monitoring equipment, and smart inverters are making significant strides. Software solutions encompass tools for demand-side management, advanced distribution management systems (ADMS), energy generation and demand forecasting, as well as network planning tools and geographic information systems.
Digitalization’s impact extends beyond emissions reduction to improving systemic efficiencies. Real-time data becomes a key insight for an efficient and responsive grid, enhancing reliability and cost efficiency. The integration of smart meters and smart grids through an enabling infrastructure mesh exemplifies how digital infrastructure transforms the grid, delivering significant cost savings to distribution companies. This also provides reasonable control and insights to consumers, propels Distributed Energy Resources through net metering, facilitates the integration of renewables into the grid, and bolsters the net-zero mission by enabling decarbonization.
Anil Rawal is Managing Director & Chief Executive Officer, IntelliSmart Infrastructure Pvt Ltd.
(This is the third and concluding part of the “Energy Transition” series . The first part and the second part have already appeared on www.tndindia.com)
