The International Panel on Climate Change (IPCC) reports keep getting grimmer. We need to restrict global warming to 1.5 degrees centigrade. The Paris Agreement hoped to restrict warming to 2 degrees centigrade. But till 2020, the world has not achieved its Paris Commitment. The frequency of extreme weather events is increasing. This has led France and the United Kingdom to decide on achieving net carbon neutrality by 2050. Germany is getting about 50% of its electricity from renewables. The European Union is trying to get a consensus for net carbon neutrality by 2050.
India’s traditional position on climate change was that the industrialised countries had created the problem. They had very high per capita carbon emissions and they needed to bring these down. India had to give priority to meeting its development needs and would try and reduce the carbon intensity of its growth trajectory. India’s role was widely appreciated as it assumed greater responsibility in facilitating the Paris Agreement. India then took leadership in setting up the International Solar Alliance.
India’s ambition has been rising. Renewable energy capacity reached 84 GW by the end 2019. The goal is to have 175 GW of renewable capacity by 2022 and then take this up to 450 GW thereafter. This exponential growth has been the result of competitive private investment. The government has succeeded in inviting private investment by relying on market mechanisms by repeatedly inviting tariff-based bids for the supply of electricity from solar and wind energy. The fall in costs of solar and wind power, globally, have been dramatic in the last decade. Renewable energy is now the cheapest source of electricity when it is generated. It makes commercial sense to use renewable energy over all other sources.
As solar power is generated when the sun shines and wind energy is created when the wind blows, the traditional view has been that for the rest of the time, electricity has to be generated by conventional means by using fossil fuels. Storage on a large scale did not appear to be feasible. It was also expected to be expensive and unaffordable. The market was tested with invitation of tariff-based bids for supply of solar power with storage. Two bidders were awarded contracts in the Solar Energy Corporation of India (SECI) auction in January for a capacity of 1200 MW with tariffs of Rs 4.04/ kWh and Rs 4.3/ kWh for supply of renewable energy along with storage. This has made renewable power with storage cheaper than new thermal power which costs around Rs 6 per unit. This has created a new paradigm.
It now makes commercial sense for India to not commence work on any new thermal power plant and have a moratorium. While ongoing thermal projects could be completed, a series of bids for renewables with storage should follow. These plants should get commissioned and run. India has spare generating capacity as demand had not grown to the extent anticipated. Covid-19 is expected to keep demand depressed for some time. As confidence grows with the experience of the functioning of electricity storage, the moratorium on new thermal projects could be made permanent.
A self-reliant India should make solar panels and batteries for grid storage. This can be achieved by the SECI by inviting bids for solar power with storage with the condition that full value addition for solar panels be done in India. The bids should offer developed land with good connectivity in a duty free Special Economic Zone dispensation and cheap electricity from NTPC to provide a competitive cost regime. The bid should be for the large capacity of 2GW per year for five years from the date when domestic production starts. This would create confidence in potential investors to get attractive bids. The second and third lowest bidders could be given the option to match the price of the lowest bidder and get orders for 1.5 GW per year for five years. To achieve self-reliance, there should be willingness to pay a slightly higher price initially as long as a competitive industry structure is being created.
Electric vehicles have arrived. They are cheaper to run. The charging infrastructure is the bottleneck. Private investment in infrastructure needs demand from electric vehicles on the road and demand for electric vehicles needs charging infrastructure. The solution lies in directing the electricity distribution companies (DISCOMS) to put up charging infrastructure for electric vehicles in cities and along our national highways. As distribution business is being regulated in India, this investment can get return along with other distribution investments through the tariffs set by the regulators. With charging infrastructure in place, the demand for electric and hybrid vehicles would take off. The Railways in India are going in for rapid electrification as it is cheaper to run trains on electricity. With most of surface transport using electricity and most of electricity coming from renewables, India would become a low carbon economy.
India could also encourage the use of electricity for cooking in the millions of homes which have been electrified in recent years in rural India. The best way of doing so would be to give rural poor consumers energy efficient induction cookers through distribution companies as was done for LED bulbs. A subsidised life line for 100 units per month should suffice for basic cooking. All electricity from renewables and all transport and cooking from electricity appears feasible and affordable. India can set itself the goal of becoming net carbon neutral by 2047.
The author is the former Secretary of DIPP, GOI and currently a Distinguished Fellow at TERI.