India's transition to a low carbon economy

Indias transition to a low carbon economy
Indias transition to a low carbon economy

India stands at the crossroads of development and cutting back emissions. If the country succeeds in its ambition to becoming a net carbon neutral economy, it would be a leader and on the frontier of tackling climate change.

Renewable energy in India has grown very rapidly in recent years. Renewable energy capacity reached 84 GW by the end of 2019. India has the ambitious targets of having 175 GW of renewable power capacity by 2022 and taking this up to 450 GW thereafter. The fall in costs of solar and wind power globally have been so dramatic that renewable energy is now the cheapest source of electricity when it is generated.

As solar power is generated when the sun shines and wind energy when the wind blows, the traditional view has been that for the rest of the time electricity has to be generated by conventional means like fossil fuels. However, this has now changed in India. The recent awards of “renewable + storage” contracts mark a major turning point. Two bidders were awarded contracts in the SECI (Solar Energy Corporation of India) auction in January for a capacity of 1200 MW for supply of renewable energy along with storage. This has made renewable power with storage cheaper than new thermal power. It, therefore, makes commercial sense for India to not commence work on any new thermal power plants.

Path forward from brown to green

A moratorium on taking up new thermal projects could be put in place now. While ongoing thermal projects could be completed, a series of bids for renewables with storage can be invited. These plants would get commissioned and run. Fortunately, 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, then the moratorium on starting work on new thermal projects could be made permanent: no more coal-based power plants in India. This has huge positive implications for the world as India is a large country and its consumption of electricity is bound to go up at least four times given its present level of development.

Growth on green wheels

As the carbon emissions per unit of electricity decline, India can look at a parallel transition away from fossil fuels in transport. The electricity distribution companies (DISCOMS) can be mandated to put up charging infrastructure for electric vehicles in cities and along our national highways. The distribution business 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. Electric and hybrids are cheaper to run and would gain market share rapidly. 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 so that carbon emissions from cooking decline with the share of renewables in electricity rising.

India can now raise its ambition to the next level. It could aim to be amongst the first set of major countries making the transition to becoming a net carbon neutral economy. It could be a leader and, on the frontier, to save the world from the disaster of impending climate change.

Ajay Shankar is a Distinguished Fellow at TERI (The Energy and Resources Institute).

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