Editorial Notes

[Editorial Notes] What India should do to get its energy transition right?

India needs to build thermal capacity as per CEA estimates and, by 2030, accelerate renewable energy production & storage capacity.
By IASToppers
July 09, 2020

Contents

  • Introduction
  • Current status of power
  • Contradictory path
  • Solar Energy
  • Challenges in solar energy
  • Boosting Manufacturing
  • Suggested pathway

What India should do to get its energy transition right?

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Introduction:

India has committed in the 2015 Paris Agreement to reduce GHG emissions intensity by 33-35% below 2005 levels, and achieve 40% of installed electric power capacity from non-fossil sources by 2030. In this context at the UN General Assembly in 2019, India announced a target of 450 GW of renewable energy (RE) to be achieved by 2030.

Current status of power:

  • As of 31 March 2020, the National Electric Grid had a Total installed capacity of 370 GW.
  • The power production in India is dominated by coal.
  • Coal (56%) > hydro  > wind  > solar PV > natural gas > bioenergy and waste > nuclear and oil.
  • The recent study of the Central Electricity Authority (CEA) estimated 430 GW non-hydro renewables (280 GW solar + 140 GW wind + 10 GW bio); thermal capacity at 266 GW thus making the percentage of non-fossil fuel (RE + hydro + nuclear) in installed capacity by 2030 at 64%, much higher than India’s Paris commitment.

Contradictory path:

  • India has recently reinforced the target for coal production at 1.5 billion tonnes to be achieved by 2024.
  • The privatisation of coal mining and recent auctions have given a meaningful thrust to this.
  • These convey contradictory signals and raise the following questions: Are our commitments feasible and targets achievable?
  • The targeted coal production of 1.5 billion tonnes, even by 2030, would mean thermal generation capacity could double over the current 223 GW.
  • In that case, even with targeted RE capacity, we will not achieve our emissions intensity Paris commitment.
  • India needs a sober assessment of constraints mixing ambition with feasibility and look at a more realistic pathway.

Solar Energy:

  • In 2014, the solar target was increased to 100 GW by 2022.
  • India reached 35.7 GW solar power production by 2019, and it seems India may reach 60-70 GW by end-2022 which will be a remarkable achievement.
  • To reach 280 GW by 2030 requires the addition of an average annual capacity of 30 GW, which at the present pace seems impossible.

Challenges in solar energy:

1. Structural challenges:

  • But solar deployment has seen policy challenges both from Centre and states.
  • They include continuous changes in duty structure; renegotiation of PPAs; curtailment of solar power; extremely delayed payments in some states; policy flip-flops on open access and net metering.
  • It also comprises of the delays by state agencies and regulators; land possession difficulties; transmission roadblocks (even in solar parks).
  • The roadblocks on deployment will affect both foreign and domestic investment.

2. Capacity and Storage:

  • Our capacity for cell manufacture is 3 GW, though workable capacity is actually around 2 GW.
  • The cells are more expensive and less efficient withlittle upgrade in a rapidly changing world of technology.
  • Our module capacity is around 10 GW.
  • 90% of cells and 80% of modules are imported largely from China or Chinese companies elsewhere.
  • Wafer imports are 100% as we don’t manufacture ingots/wafers.
  • For every GW (average cost in 2019 of Rs 5,000 crore) we deploy, more than half goes to China.
  • Continuation of this strategy would lead to a huge import bill and put our energy security at risk.
  • The imposition of customs duty and other restrictions, due to recent standoff, will lead to increased tariffs and supply bottlenecks, making capacity increases difficult.
  • Solar with storage requires even greater solar capacity deployed, because part of it would go for storage.

Boosting Manufacturing:

  • There are huge storage constraints in India which include limited Hydro pump storage, solar-wind hybrid with batteries.
  • This brings us to the vexed problem of domestic manufacturing.
  • India has dismal manufacturing in solar and we do not even manufacture lithium-ion batteries.
  • Lithium and other raw materials are in short supply, and China has moved to take control of sources.
  • To achieve self-reliance, India must at the least plan to make 5 GW of ingot/wafer manufacturing capacity urgently.
  • Indigenous manufacturing should be flexible enough to absorb shifts in tech space and maintain a competitive edge in global markets, keeping in mind the risk of being outdated.
  • Policy, fiscal and financial support prescriptions should aim at creating globally competitive industry.
  • India needs todevelop batteries suitable for extreme Indian weather conditions but globally benchmarked; this demands a mission approach, getting our best people and institutions together and properly funded.

Suggested pathway:

  1. Build thermal capacity as per CEA estimates and quickly. None after 2030. Retire inefficient plants. Plan for miner rehabilitation.
  2. Accelerate RE after 2030 with storage. Aim for 10 GW solar and 5 GW wind annually.
  3. Develop 5-10 GW ingot/wafer manufacturing capacity urgently and diversify import sources even at some extra cost.
  4. Develop a battery for Indian conditions in three years; full battery manufacturing in India in five years.
  5. Revisit the manner of solar generation. Prioritise decentralised and solar agriculture.
  6. Plan for hydrogen economy with pilot projects and dedicated highways for long and heavy haul traffic.
  7. Put a strong energy demand management system into place with much stronger energy efficiency and the conservation movement.
  8. India should move towards compulsory green buildings.
  9. Setting the demand-supply projects right.
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