Kanchan Banerjee brings out some facts and challenges of India’s energy sector
Knowledge is power, and for each country on earth to be blessed with knowledge and information infrastructure, energy abundance is essential.
But before we discuss and review the global energy picture, let us look at the world scene in terms of both resources and challenges.
About 16% of world population, or roughly 1.1 billion people, are still illiterate. Almost a similar population does not have adequate access to potable water. About 2.7 billion people use solid and liquid fuel sources such as coal, wood and kerosene for their cooking, heating and lighting. While China and India share almost 30%, or 2.5 billion of global population, India’s energy sector’s picture is not that glossy compared to its Asian powerhouse counterpart and several other nations.
India is at a tipping point, crisis as well as new opportunities are facing the nation.
Let us look at some comparative demographic and economic figures.
Area, population and total GDP (Nominal)
Now let us look at the Energy production and consumption of these countries above (plus few other comparable ones):
By the end of this century, almost all people living on earth will eventually use energy in modern forms of fossil and electricity. As the demand from the backward nations and societies in terms of usage of modern facilities, including transition from raw natural energy source such as wood or coal or kerosene for cooking, heating and lighting, will mostly transit to electricity and efficient, modified and cheaper fossil sources. Many more people from less developed parts of the world will have basic modern amenities television, refrigerator, cars and even washing machines. In that scenario, it is only matter of time when alternative cleaner and cheaper energy sources are going to be a norm since there is no other way to support the demand via conventional and fossil sources.
The idea of regeneration and renewal is embedded in India’s heritage in the form of Lord Shiva. Though the common view of Lord Shiva is as the destroyer part of the trinity, truly he is the embodiment of renewal. Ancient India and many other cultures of the world worshipped the Sun god. Millions around the world today practice yoga and Surya Namaskar along with chanting of mantras offered to Suryadev, the source of all life, light and energy. While India is trying to catch up with other nations such as China and the USA, it may fail in the short term unless there is proper strategy and planning. This piece is an effort to conduct a comparative study of achievements of other nations, and subsequently explore India’s potentials and future directions.
Modern era is called an information age, but the foundation of this civilization is nothing but energy, most importantly electric power. Whether received from a grid or battery or a small petro fuel operated generator, even a single moment without power is unthinkable in the developed world. Imagine when your cell phone does not have charge!
This is indeed an era of energy – the legendary Dwapara yuga in the concept of the Hindu seers of past! For mother earth’s and our existence sake this energy has to be clean; time is ripe to add millions of ‘Green Collar’ jobs to the economy, provided there is leadership matched with vision and action.
We know enough about the limitation and perils of fossil fuel. The world, the poor and developing nations, including India, can afford alternative energy today. In America, due to higher cost of everything from labor to equipments to distribution, it may still be seen as waste or not much profitable to produce bio-fuel from corn or for that matter electricity from solar panels on rooftops.
But that economic concern is about to end everywhere as the oil and coal industries and lobbies fail to hold the ground any further. New inventors and innumerable entrepreneurs around the world will break the monopoly very soon and investment will soon shift towards renewable, especially in solar, wind and biomass. Solar is almost a one-time investment for harvesting the profit from the rays of sun for long time to come. India has one of the world’s largest shares of available blessings of sun for many days of the year. Is India ready to receive it? What about the government, the industrialists, the budding entrepreneurs? A nation aspiring to be ‘super-power’ with 1.2 billion people, quarter of which are yet to taste the benefits of electricity, more than half having no surety of supply, especially after the massive black-out last summer when almost third of the country did not have power for hours, has no choice but to go for alternatives.
Yet, in this era of global warming and climate change, India has to significantly reduce its carbon emissions. If India does it right, it may decrease its emissions from 1700 million tons in 2009 to 426 million tons in 2050 according to one study. This means, annual per capita emissions will drop from 1.4 ton per capita to 0.3 per capita. Let us look at the top 10 producers and consumers of electric power in the world.
Global Electric Energy Production of top 10 nations
Source: US Energy Information Administration (EIA)
First, take a look at a tiny nation like Japan. It is the third largest consumer and producer of electricity with per capita consumption is close to 8400 kWh compared to 600 kWh in India. Although Fukusima has taught lessons to the whole world, there is one more thing to learn from Japan: Economic power~ Energy.
France depends on nuclear for most of its power and Germany has the biggest share of Solar.
In past few decades the growth formula had major factor: Economic power~Energy, now the new factor – Economic power~Consumer is emerging in world’s two most populous countries where the first equation is more important than ever to satisfy the second one.
China, which has three times more land and rivers than India, is far ahead in the energy game. Less than 1% people don’t have electricity compared to roughly 30% in India. Granted, due to usage of massive amount of coal and the pollutions from it is causing major health hazards to millions and the cost is over half a trillion dollar in health-care and worker absence related losses. Perhaps this and other concerns in the field of renewable energy, it is also ahead of India in terms of total output.
China has about 1,500 major rivers each drain 1,000 sq km or larger areas. China is rich in water-power resources, leading the world in hydropower potential, with reserves of 680 million kw and the total potential is 378,000 mw. India has almost one-tenth of rivers compared to China with a hydropower potential of 150,000 mw, and ranked fifth in the world. In recent years, lots of discussion is focused on realizing the hitherto untapped water resources and hydro potential in the eastern region of the country, about 12,500 mw.
China was almost a non-player in the renewable energy sector until recently. Their serious concern of energy security pushed for a policy recommending heavy investment in the renewable energy sector. Now, China is one of the most dominant powers in renewable energy. Beijing has overtaken the USA in solar energy generation. This has caused trouble for American companies generating solar energy and producing solar industry related equipment. The fact that Chinese solar panel production cost fell by 40% caused many US companies to fold up and sanctions/tariffs are being considered as a way out! And the concern of stealing of intellectual property right, huge government doll out, trade rule violations and very smart strategies and polices placed will help China to win the war. Though there is an apparent trade-war between the two, eventually, in long run, it may become a win-win-situation for China, the US and other global players. First of all, China’s (and India’s) investment in renewable sector will help reducing fossil emissions, improving the cost competiveness of renewable with fossil fuels and finally US companies may get a new opportunity to invest in Chinese alternative energy technology sector (solar and wind) and may buy back the same for US firms to use while Chinese investors invest in American renewable energy companies.
China’s renewable energy plans in their 12th 5-year plan are very ambitious. It aims to increase to 10GW installed solar capacity by 2015 from about 700 MW in 2010, mostly from Photo Voltaic and some from solar-thermal; by 2020, they want to reach the 50GW target.
However, for China, so far the success story has been in the wind sector. In 2010, it surpassed the USA in wind capacity and making four of the Chinese wind turbine manufactures among the top 10 and world’s largest manufacturer in only five years.
With a population almost same as China, India produces almost one-fourth electricity of China and with a population six times more than Brazil, its total production is nearly two times of the South American emerging economy (about 531 bkWh) and one-fourth of per capita usage (about 600 kwh) compared to its BRICS partner.
India’s energy shortage is a chronic problem with an average demand-supply gap of almost 12% due to heavy reliance on conventional sources which are both costly and in terms of infrastructure requirements it is difficult for India to keep up with the demand. Currently around 16% of India’s total installed electric capacity comes from renewable sources.
India is inching towards a great achievement, not by choice, but due to dire necessities. From about one sixth of total energy production in the past decade, it may have one third of its energy coming from renewable energy by 2020 and over 60% by 2030. One study shows that with as high as 97% of the overall investments will move towards renewable energy along with cogeneration and may annually reach average 6.1 trillion Indian rupees ($ 117 billion) by 2050.
According to 2012 report of Ministry of Statistics and Program Implementation (MOSPI), majority (64%) of India’s power generation was through Thermal (704 thousand mw Thermal,:114 thousand mw Hydro and 26 thousand mw Nuclear Total: 845 thousand mw.). Rest came from other sources including wind, solar and biomass.
There are several key factors which will force the renewable energy sector in India to grow significantly. For instance, rising cost of fossil fuel imports, environmental perils of fossil fuel, new investments in this sector and availability of new and cheaper technologies are some key factors. The demand for energy, high cost of import and developing relevant infrastructure for conventional energy will give India no choice but the ‘technology jump’ as it had in telecom industry from traditional landlines to mobile technology. While developed countries will have to take time to move from existing non-renewable technology and infrastructure to the newer ones, countries like India can be greatly benefited by grabbing the opportunities to use new technologies in renewable sector. Among the available options, solar and wind will dominate.
So, how is India doing in renewable sector? Here is a break-down of renewable sources in India:
Source: Ministry or New and Renewable Energy (MNRE), as of fourth quarter, 2012
The chart above indicates that in the category of total installed capacity of grid interactive renewable power was around 27 thousand mw which includes wind, about 71%, small hydro (15%) and Biomass (13%).
A recent study jointly published by Greenpeace, the Global Wind Energy Council and European Renewable Energy Council shows that India is poised to have great market development in renewable electricity sector where the market share will grow at 32% by 2020 and 62% by 2030. It has projected that by 2030 it will produce about 548GW, increasing the market share by 62% and will generate about 1,356 GW by 2050. These projections indicate that India will save over 25% of its current spending in the energy sector while increasing overall production significantly.
Consequently, India will benefit in a big way by reducing carbon emissions. In 2009, India was responsible for emitting 1700 million tons of gas. If the above projections come true, by 2050 it will be reduced to mere 426 million tons, which will be a great achievement for a thickly populated developing country. This will in per capita terms mean a drop of annual emissions from 1.4 tons per capita to 0.3 tons by 2050.
So what does the future look like for India? We are going to focus mainly on solar, wind and biomass to understand the current scenarios and future potentials, including challenges in renewable energy sector.
India is second in the world when it comes to solar energy beamed on the land. A study shows that India being close the equator gets 200 average sunny days (3,000 hours) per year with unit potential of about 4kwh/day and 15% efficiency has a potential of 5000 trillion kwh energy.
India can generate about 1,900 billion units of solar power by using just 0.5% of land. And that much energy is more than enough to supply all energy needs of the country in 2030! On the other hand, India has over 7,500 km long coast line where offshore wind farms can be installed in addition to the land installations.
Though US potential is much higher than India, several factors are slowing down its expansion in solar sector. Going by the trend, the US by 2030 will be lagging behind India in producing solar energy. A KPMG report suggests that India’s PV capacity increase has drawn attention of the world and some predict that India has a solar market potential of 12,500 mw by 2017.
The industry faces several challenges though. The cost per unit to produce is as high as Rs 19 mainly due to high cost of importing (80%) silicon and solar wafers. Productions of these materials are capital intensive and investment is not enough enable India to produce at home. And finally, implementation of proper policies including centre-state relationships and legalities, government investments and leadership of various states and local agencies to move forward with specific goals may solve many challenges.
But innovative ideas with entrepreneurial spirit as seen in India today give hope. Here are some recent developments and facts:
Jawaharlal Nehru National Solar Mission (JNNSM) was launched by the MNRE in 2010 with the goal of deploying 20000 mw of grid connected to solar power by 2012 making India solar energy leader in a three-phase plan and achieving grid parity with conventional sources by that year and with coal by 2030. The strategies include long term policy implementations, aggressive R&D and domestic production of critical raw materials, components and products needed for the industry. However the result and progress of this project has been mixed creating some doubts about the success of this very ambitious project.
The picture in some states is far more encouraging. Gujarat shows the way. Under the leadership of Chief Minister Narendra Modi, Gujarat has the largest solar PV hub of the world which was launched in May 2012 with an estimated budget of US $2.3 billion. The park located near Charanka, Gujarat, will have the capacity to generate about 600 MW which is overtaking the Chince Golmud Solarpark with the capacity of 200 MW. This park along can reduce 8 m tons of CO2 per year once completed. In addition, Gujarat has started an innovative way to both preserve land and reduce water evaporation by installing solar panels over the irrigation canals. Gujarat has huge barren land and water canals with huge potentials to expand the scope of production.
Rajasthan, adjacent to Gujarat where large Thar dessert is located, is next in line. A group of solar parks in Jodhpur, Jaisalmir, Bikaner and Barmer districts are being planned with a target to generate up to 11,000 MW in about 12 years. It has created a bidding process for public-private ventures in the lines of Special Economic Zones (SEZs) where the Jodhpur one is aimed for 3,000 MW. The project got a great boost from JNNSM which promised to allocate 873 MW. Along with building the solar parks, the state is promoting related R&D, manufacturing industries and training facilities in the area. Rajasthan has great supply of raw materials such as zinc, molten salt and solar glass. Thus far, over 700 companies have registered in various solar power projects adding up to about 17000 MW promises.
Now let us look at some private ventures. Bangalore based Selco lead the way. Founded in 1995 by Magsaysay Prize winner harish Hande, it provides solar panels to low income households. They have installed solar power systems in over 125,000 houses and plans to install over 200,000 households by 2014. A good example of Solar-Thermal is the work of a company called Areva Solar, which is implementing a project that aims to produce 250 mw in Rajasthan.
According to MOSPI, as of the first quarter of 2011, total 7 lac solar cookers were distributed among various states, including 1.7 lac in Gujarat and 1.4 lacs in Madhya Pradesh. Over 1,400 water pumping wind mills systems were installed in over 7,000 villages. One company called Claro Energy is producing solar powered water pumps for irrigation. Another company called .light has claimed to have reached a goal of providing 7 million solar lanterns in 40 countries is collaborating with Indian companies such as VC firm Nexus Venture Partners, the Mahindra Group, venture firm DFJ, and others. Flareum, another company in solar sector is designing systems for cooking and for producing heat for various industrial applications.
A start-up company called Mera Gao Power has demonstrated a new model by electrifying a group of 70 villages and install micro-grids. According to this model, to electrify about 50 households with one micro grid will cost about $1200 which included two solar panels, two batteries and four distribution lines. The cost will be less than kerosene lanterns and it the whole system will be paid off in a certain time-frame costing Rs 100 per month per household.
India has over 80,000 villages still off-grid and the choice can easily be made there to install off-grid solar technologies which can be cheaper and faster to implement rather than wait for the existing grids to reach there.
Another startup company, Azure Power has a model to put solar panels on multiple rooftops to generate megawatt capacity and to supply electricity to the households and would share revenue with the building owners. It has already implemented panels producing over 50MW and the Gujarat Government is also wooed them to the state for implementing such projects. Another company called SunEdision is also focusing on rural India. They also plan to combine solar with water using irrigation canals.
By end of 2012, India had total 18,420 MW installed capacity in wind power electricity which accounts for about 1.6% of total power for the country. According to a report by Global Wind Energy Council (GWEC) India was the third largest wind power market in 2011 after China and US and in terms of installed abilities a fifth position after Germany and Spain. India will have installed Wind capacity of 90 GW by 2020 and 190 GW by 2030; it has a potential for 400 GW if off-shore opportunities are fully utilized. Wind Energy Outlook estimates that this can draw over $16.5 billion investment creating around 179,000 jobs.
Various Indian states are leading the wind power — the top five states in this sector are Tamil Nadu (7,134 mw), Gujarat (2,884 mw), Maharashtra (2,320 mw), Karnataka (1,730 mw) and Rajasthan (1,524 mw). A private company Suzlon is the leader in this sector and has built the largest Wind park in Vankusawade, Maharashtra, with a capacity of 259 mw.
According to MNRE, India produces about 500 million tons of Biomass per year of which, a huge amount is unused. India’s total Biomass energy potential is around 25GW. Currently the electricity capacity is about 2 GW which is about 8% if the potential. Of the potential co-generation capacity of 5GW, about 1.2 GW is installed, of 17GW potential in Agro-residue, about 900 MW is installed and of 3GW waste energy potential, only around 70 MW is installed. With vast urbanization of the country more waste in the cities in addition to agricultural waste and residues (for example rice husk, sugar plant etc.) is bound to grow rapidly. This is a great area to focus on both from waste management as well as electricity generation purpose. Many private companies are already working in this sector with many small size plants. India can expand both on some large scale, over 100MW and innumerable small plants around each cityline. India gives generous incentives for Biomass.
While there is a great opportunity in place for India to be an energy self-reliant nation, it has its own challenges. It has to reduce the manufacturing cost of materials and reduce reliance on imports, the cost parity has to be fair with gradual weaning of subsidies, much educational and promotional work needs to be done to attract large number of entrepreneurs, investors and increasing consumer awareness. Industry standards need to be formed properly where government has a major role to play as well as ensuring no fragmentation between manufacturing and supply chain. In addition, governments must be proactive to bring more states to the fore, faster and more efficient implementation of Renewable Energy Certificates (REC) and to encourage industries to move towards renewable incentives like carbon trading as source of revenue should be used
India can learn one particular lesson from China. Typically China’s large state-owned companies don’t get interested in small-scale projects. But in energy sector this has become a boon for Chinese small time private entrepreneurs who typically work with very small budget yet with much innovative ideas. China is experimenting in this path which is now paying off to bring in advanced and innovative technologies and a sure market shift with newer possibilities for which renewable energy industry is greatly suited for.
The world in general and India in particular has no choice but to go for alternative, non-fossil and renewable sources. While greenhouse gas, climate change etc. are bigger concerns, equally important is to become energy secure, new jobs creation and after all providing power to all its citizens to live in 21st century and providing it uninterruptedly, efficiently and with cost effectiveness. And also, India must remain ahead of the game to remain a major influential power in the world and compete with the likes of China.
Unlike in the past, only few nations holding the power to do the core R&D and produce technology, the industry is now globalized. Innovation and competition will make things much easier. Why India should not be a leader in the future of renewable energy can only answered by two things: willingness of the government by setting up or rectifying policies so that the subsidies and investments actually produce electricity (as opposed to just spent on producing technology and building infrastructure), industrialists and investors’ risk taking. Finally thousands of young entrepreneurs together can make India a ground for million small scale industry houses to fuel the economy of the nation and prosperity of the people.
India must diversify its energy resources by increasing more focus on renewable, allowing both macro and micro industries in each sector to grow so that there is no monopoly yet the production and distribution of both necessary equipments and tools and power properly. A distributed training institute will also be a necessity for the Green Collar jobs.
A country which has a proud history of solar dynasty and Suryadev, Pavan or Vayu devatas has no reason to rise to the occasion and get their blessings for the masses in daily life. While a nation which based on their knowledge of environment promoted and protecting trees and herbs such and Tulsi, the air today is very badly polluted, the rivers and soil are no exceptions. Perhaps India is at a tipping point to sing praise to these Devatas not just for Bhakti, but due to sheer necessities!