Appropriate policies can hasten our energy transition

Context: With the right set of policies, regulations and incentives, India could well emerge as a global energy transition innovation hub and become the home for clean energy giants.

India’s impetus towards clean energy

  • Big projects in the pipeline: Major projects include-
    • Reliance Industries recently announced plans to invest $10 billion in the clean energy sector by 2030, including Giga factories to manufacture solar modules, battery storage, electrolysers and fuel cells.
    • Adani Green Energy Ltd recently announced the acquisition of SB Energy.
    • NTPC has announced a target of 60-gigawatt wind and solar energy by 2032 and recently floated a global tender for 1 GWh of grid-scale battery storage.
  • Optimistic projections: 
    • McKinsey’s research cites electricity could increase its share of final energy consumption from 19% to 30% by 2050, and renewables are the lowest-cost long-term option.
    • According to Central Electricity Authority of India projections, wind and solar energy could contribute 31% of gross electricity generation by 2029-30, up from 9.2% in 2018-19.
  • Towards economic competitiveness: Energy is a significant component of the cost of doing business. Deeper penetration of renewables could shift the balance in terms of both cost and carbon footprint.
    • Accelerating energy transition could reduce India’s energy import bill, which exceeded $150 billion in 2019-20.
    • Creating manufacturing capacity at global scale for solar modules, batteries and electrolysers could generate many jobs and export potential.

Four fundamental shifts that could accelerate momentum of energy transition in India over next decade:

  • Rupee solar: Cost per unit of solar energy to drop to half of current levels on back of higher scale in manufacturing and commercialisation of newer solar technologies such as thin films and perovskites.
  • Round-the-clock renewables: Hybrid models combining solar and wind generation with energy storage could potentially deliver close to 24X7 clean energy, mitigating the intermittency of renewables.
    • Renewable hybrids could produce at Rs 4.50-4.70/unit today, at 80-85% round-the-clock fulfilment.
  • Hydrogen at hundred: Current cost of producing green hydrogen is around $4.50, or Rs 330 per kg. 
    • With the falling cost of solar energy combined with a fall in the cost of electrolyser equipment, the cost of green hydrogen production can fall down to Rs 100 per kg.
    • This could open up demands in sectors such as refineries and fertilisers, steel and transportation.
  • Digital energy: Adoption of digital, advanced analytics and automation will drive out structural inefficiencies and increase utilisation across the energy value chain. This will include 
    • Aggressive reduction of aggregate technical and commercial (AT&C) losses, 
    • Improvements in efficiency and yield of renewable generation through digital means,
    • Faster asset build-outs through automation or peer-to-peer energy-trading platforms that leverage blockchain technology.