Disruptions in economic activities due to the coronavirus pandemic have exposed the vulnerability of the energy system. The sharp fall in energy demand following lockdowns and the accompanying price volatilities have destabilised the energy system - putting the energy transition process at a risk. It has altered the competitiveness of renewable energy technologies and has reduced incentives for energy efficiency.
Energy transition refers to the energy sector’s shift from fossil-based systems of energy production and consumption including oil, natural gas and coal, to renewable energy sources like wind, solar as well as lithium-ion batteries. The increasing penetration of renewable energy into the energy supply mix, the onset of electrification and improvements in energy storage are all key drivers of the energy transition. India, like most other countries, had an ongoing energy transition, but now the question is: Will Covid-19 create a pause in the transition process or create a shift in the trajectories?
The World Economic Forum (WEF) in its latest report on energy transition has feared that Covid-19 will compromise the transition to clean energy without an urgent stakeholders’ action as unprecedented disruptions due to the pandemic threaten this transition. India, which has moved up two positions to rank 74th on the global 'Energy Transition Index' of WEF in 2020 with improvements on key parameters like energy security and environmental sustainability, is in a dilemma.
The shift to clean, renewable energy in India has been a priority and the reduction in the prices of green energy along with growing environmental awareness has helped to further this trend. India has committed `24 trillion to the energy sector under the ‘National Infrastructure Pipeline’ to improve energy access and sustainability. The lion’s share of this will be towards renewable energy investments. The sharp fall in GDP and the deceleration in government’s revenue collections following the pandemic have now put question marks about the governments’ ability to invest big money in the energy sector.