Banking on renewables

India needs power desperately, but it also happens to be the world’s third-largest carbon polluter. Nearly one-fourth of the country’s population has no electricity at all, while a large section gets it only for a few hours daily. If crores of Indian citizens are to be lifted out of grinding poverty, the government must give them power — which means India’s carbon dioxide emissions (presently 6 percent of the world total) will more than double in a few years. But when the Paris climate pact was signed in 2015, Prime Minister rendra Modi made a commitment — that India will get 40 percent of its electricity from non-fossil fuel sources by 2030. There was then widespread scepticism whether India was setting an over-ambitious target — that she will add 175 gigawatt of renewable energy by 2022, with 100 GW from solar, 60 GW from wind, 10 GW from biomass and 5 GW from small hydropower. But in little over a year, India’s progress in this transition has strengthened its credentials to be a climate leader, especially after the US pullout. A very significant auction was held last month, in which power companies offered to charge as low as Rs 2.62 per kilowatt-hour (kWh) of electricity generated from solar panels they were bidding to install at Bhadla energy park in Rajasthan. The previous record had been set last year at Rs 4.34 per kWh of solar power, so there has been a more than 40% price drop within a year. Solar tariffs have thus dropped below coal tariffs for the first time in this country, with average Rs 3.20 being charged per kWh of coal-based power. Wholesale price bids for wind energy also reached a record low of 3.46 rupees in February this year. Observers have pointed out that while rendra Modi’s commitment to clean power was apparent even when he was Gujarat chief minister — his increased focus stems from the fact that lessening the dependence on oil imports is good economics, while battling pollution and climate change is good politics that has appeal to middle class and new age voters.

In the wake of ‘Trumpexit’, Prime Minister Modi during his France visit, renewed his Paris pledge by vowing to go ‘above and beyond’ the climate pact. His government has already put forth a mix of subsidies to encourage renewables, approving solar plants while putting coal-based plants on hold;  Power minister Piyush Goyal recently announced that by 2030, only electric cars would be sold in the country. Even NTPC, the country’s largest coal power producer, has announced interest in setting up solar panels over land initially taken for thermal projects, and that it is aiming at 30 percent of its capacity to come from non-fossil sources by 2032. Alysts believe that with the price of renewable energy sources dropping fast due to the strong policy to encourage its use, India may succeed in drawing green investments from across the world (up from an estimated 20 billion dollars in the last two years). And while the US pullout may induce other developed countries to tighten purse strings for the global green fund, experts point out that what countries like India are actually looking for is commercial deals in the form of loans from industry, not grants from governments. The NITI Aayog, recently released a report in collaboration with a US-based think tank that India could save 60 billion dollars and cut its projected carbon emissions by 37 percent by 2030 if it adopts widespread use of electric vehicles both for private and public transportation. Recently, a report titled ‘Rethinking Transportation 2020-2030’ by Stanford University economist Tony Seba created waves around the world. In his report, Seba predicted that the world will switch over to electric vehicles en masse after five years by 2022, when car battery ranges will surpass 200 miles. Petrol-diesel cars will go obsolete, oil prices will plummet below 25 dollars per barrel, the entire oil supply chain will shrink dramatically and oil producing tions will be in deep trouble unless they diversify. This change will accelerate to ‘computer driven transportation’, and if the world does not prepare in time for this energy revolution, it could  move very fast to trigger a global fincial crisis — the report warns. So, even if such a scerio takes longer to arrive, the technology is moving fast in that direction. This is because storage batteries are really getting better; the cost of lithium ion batteries has also dropped one-fourth due to economies of scale. So India seems headed for big time, so long as the Centre takes care to resolve teething for the renewables industry under the new GST regime, help put power distribution companies on sounder fincial footing, and go all out to encourage clean power.