Ashraf Engineer
March 15, 2024
EPISODE TRANSCRIPT
Hello and welcome to All Indians Matter. I am Ashraf Engineer.
As the battle against climate change rages on, the transition to renewable energy becomes increasingly critical. How India, with its vast population and consequent energy demand, does on this front has an impact not just on our country but the world.
India’s energy demand is expected to grow faster than that of any other country due to its sheer size and growth potential. It stands to reason that most of this new demand simply has to be met by renewable sources.
In fact, our energy transition, the most salient of all transformations because of its scale and impact, is anything but easy. It faces a variety of challenges, from financing to community opposition and policy uncertainty to grid integration.
SIGNATURE TUNE
As of December 2024, India’s renewable energy installed capacity was 209.44 gigawatts, an increase of 15.84% from the previous year. No wonder Department for Promotion of Industry and Internal Trade data shows that the space is highly attractive for investors. Between April 2000 and September 2023, it received foreign direct investments of $15.36 billion. There are a host of other investments made or in the pipeline. For instance, India is set to invest more than $360 billion in renewable energy and infrastructure by 2030, with $190 billion to $215 billion needed to achieve the targeted 500 GW of renewable capacity by 2030. Another $150 billion to $170 billion will be needed for electricity transmission and storage.
All this is fine but for India to achieve Net Zero by 2070 it must install 7,000 GW of renewable energy capacity. However, deployment beyond 1,500 GW could face serious challenges, such as high land prices, land conflict and population density.
Independent think tank the Council on Energy, Environment and Water recently mapped India’s renewable energy potential by analysing its entire landmass and applying real-world constraints. It found that India has renewable energy potential of more than 24,000 GW.
The study went into granular details of the landmass to map where renewable energy and green hydrogen projects can be built, taking into account the challenges of land, people and compounding, non-linear climate risks.
Beyond 500 GW, renewable energy will need to be deployed in earthquake-prone zones or in areas with higher seasonality where generation can be lower than the median. For the 1,500 GW to 3,000 GW range, it will need access to high population density areas with more than 4 lakh people per square kilometre. It would also mean exploring land resources in conflict zones.
Beyond 3,000 GW, challenges associated with all constraints, from land price to population density and conflicts, will rise further, the report said.
The study found that population density significantly limits the realisation of India’s renewable energy potential, with only 29% of onshore wind potential and 27% of solar potential located in areas with a density lower than 250 people per square kilometre.
Much of the potential is in high-climate-risk and high-land-price areas. Only 18% of onshore wind potential and 22% of solar potential are located in areas with low climate risks and low land prices. Land conflicts will pose further challenges, with only 35% of onshore wind potential and 41% of solar potential located in areas free from historical land conflicts.
On its part, India has chosen a hybrid approach. It expanded all forms of supply in 2023 in response to the 2022 energy crisis. This has financial implications – it pushed India’s energy subsidies to a nine-year high of Rs 3.2 lakh crore for FY23.
This is a big burden to bear and India keeps falling back on fossil fuels. So, clean energy subsidies accounted for less than 10% of total energy subsidies in FY23. Coal, oil and gas subsidies accounted for 40%. Most of the remaining subsidies were for power consumption, especially in agriculture.
In 2023, rising demand and the international energy price crisis following Russia’s invasion of Ukraine led India to significantly increase support for fossil fuels. To protect low-income households, India responded to peaking fossil fuel prices in 2022-23 by capping retail prices of petrol, diesel and domestic liquefied petroleum gas; cutting taxes; providing direct budgetary transfers to businesses and consumers; and supporting existing energy supplies. As a result, oil and gas subsidies rose 63% in FY23 from FY22, according to the International Institute for Sustainable Development. Its report said subsidies for coal also rose 17% in the same period.
International Energy Agency data shows that coal accounted for 45% of India’s total primary energy supply in 2022, up from 43% in 2020.
Altogether, fossil fuel subsidies were five times greater than clean energy subsidies. So, it would seem India is unable to walk the talk on renewable energy.
While it’s true that fossil fuel subsidies reduced by 59% since their peak in 2013-14, without further targeting and a return to market-based pricing, they could mount again. Untargeted fossil fuel subsidies are an inefficient way of supporting low-income households and they reduce the money available for supporting clean energy.
So, India’s current approach perpetuates a dependence on price-volatile and geopolitically risky fossil fuels, and delays India’s clean energy goals.
It’s worth staying with the financial aspect for a bit.
If we are to decarbonise, we need technology and funding estimated at $150 billion to $200 billion annually. Policy measures such as green bonds, green deposits, green taxonomy, and so on, lubricate the flow of resources for energy transition. Accordingly, regulators have implemented policies and issued guidelines.
Ironically, the biggest challenge is the demand for renewable energy. Renewable projects now produce so much power that operators are forced to reduce load or switch off power to ensure smooth operation of the grid. The integration of renewable energy into existing infrastructure poses challenges such as grid stability, voltage fluctuations and frequency regulation. To offset that, efforts to forecast and schedule wind and solar power are gaining steam.
Unfortunately, as I said earlier, coal-fired generation has not reduced alongside the rise of renewable power. This is a consequence of rising demand. So, India is producing huge amounts of coal-fired power and investing in more infrastructure for it. This means that distribution companies are refusing to sign new agreements to purchase renewable power. To overcome this, interventions are required. These include distribution reforms, adoption of frameworks for new technologies and solutions to integrate an increasing share of renewables into the grid.
However, policy uncertainty is a hurdle. Lack of clarity about tariffs, subsidies and regulations hampers investors and developers. Also, policies differ vastly from region to region. Obtaining permits and licences, meanwhile, can be complex and time consuming.
There is also the perennial problem of land acquisition. It’s a lengthy and complex process due to regulatory requirements and land conflicts. Without streamlining that, project development can only plod along.
Solar and wind power rely on weather conditions but they can be inconsistent and lead to fluctuating energy production. In order to tackle this unpredictability, we need solutions for storing energy. Current battery technology has limitations in terms of capacity and longevity, so it’s crucial to develop storage systems to stabilise energy supply in relation to demand.
I want to address community concerns over renewable energy projects too. Resistance from various communities slows such ventures. This is because the effects on health and environment are often misunderstood. So, raising awareness is crucial for public support. Collaborative decision-making with communities can build the trust needed.
Lastly, on the environmental front, solar farms and wind turbines may disrupt wildlife habitats and sometimes resources need to be extracted from the earth for them. Conserving biodiversity and protecting habitats during project development can offset the impacts.
India is sitting on a great opportunity to reduce its carbon intensity to less than 45% by the end of the decade. India’s target is to produce five million tons of green hydrogen by 2030 and our ambitious renewable energy goals have the potential to transform the power sector. The growing population and electrification of rural homes are fuelling demand and clean energy can reduce pollution levels as villages become self-sustainable.
However, as we’ve discussed, scaling up renewable energy presents numerous challenges, including technological, financial, regulatory and social. Innovative solutions and collaborative effort can overcome them. India needs a cleaner, more resilient energy system and long-term sustainability goals are within reach if we act now. Without that, the future is dark.
Thank you all for listening. Please visit allindiansmatter.in for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at editor@allindiansmatter.in. Catch you again soon.
