SUN: emPOWERING INDIA

It takes around three hours for our SUN to send us as much energy, from a distance of nearly 150 million kilometres, that all of mankind’s activities utilize in a single year. Yet, we continue to burn fossil fuels until protecting our environment becomes non-negotiable– which it has.

We ushered in the 21st century where energy needs for the emerging economies in Asia, Africa, and Latin America are expected to pose the greatest threat to our environment, leaving us with no other alternative but to promote cleaner and renewable options for generating electricity. Interestingly, these regions receive more sunlight as compared to North America and Europe but these northern hemisphere continents are way ahead when it comes to rejigging their energy mix in order to show care towards our environment.

Where the Sun doesn’t shine much, the wind blows – records – Denmark, having installed its first wind turbine in the 70’s, aims to become a 100% renewables country by 2050. In 2015, 57% of Scotland’s energy came from renewables. At over 26%, renewables are the biggest contributor to Germany’s electricity supply. In comparison, USA has a share of a good 13% of renewable electricity generation and has a very bright and clean energy future. New technologies that once were extremely expensive to install and use have become very cost competitive at a very fast pace.

These testimonies from around the world inspired India to set an ambitious long term target for renewable energy generation. With 175 GW from renewables (including 100 GW from Solar) by 2022, India’s energy mix will be one of the cleanest and greenest in the world. Through a variety of incentives such as GBI’s (Generation Based Incentives), interest and capital subsidies, tax breaks, and concessional financing, etc., our government has taken the initial steps in the right direction to promote the generation of electricity by renewable energy resources. The multi-pronged policy framework aims to set-up both Grid and ‘Off-Grid’ power generation via solar farming and create an environment of competitive solar energy penetration in centralized and decentralized manner.

A substantial government backing, international political consensus (United Nations Climate Change Conference, Paris) and reduction in the prices of PV panel have already pushed the prices of solar electricity downwards. The recent tariff quote of Rs 4.34 per unit, for NTPC’s (reverse) auction of projects of six 70 MW each, by Finland based Fortum Finnsurya Energy indicates that we have achieved the price parity between solar and conventional electricity. The tariff has steadily fallen from Rs 17.91 in 2010, getting closer to the top of the range of coal based power which, typically, is Rs 1.5 to Rs 5 per unit. Given the abundance of both fossil and renewable resources in India, the energy companies need to be creative and focus on resource optimization to stay ahead of the curve.

Even as the country goes bullish on renewable energy, its dependence on Coal and Natural Gas may merely taper down a bit but not before we see a peak production backed by the robust economic growth, pending electrification of large parts of the country, and consideration for weather based outages affecting renewable sources. Therefore, clean coal technologies will be an important part of the energy mix in the country. Investment in these technologies along with focus on increasing supercritical capacity should be the way forward as India looks to add another 100 GW of coal based power over the next 10 years.

On the flipside, we should look at the impact of this ambitious solar power generation plan, which is expected to supply about 30% of India annual electricity needs, on India’s farmlands. Industrialization, large country-wide infrastructure projects, and continuous urbanization has already seen area under cultivation dropping at an alarming rate. Situations of drought, crop failures due to changing climatic conditions – unseasonal rains, drought, excessive heat waves, etc. would leave poor farmers with the only option to sell their land. This may make land acquisition relatively easier in the short run but not without adversely affecting food prices and in majority of cases, social status of the farmers who will no more be landowners. Therefore, it’s very important for the policymakers to look towards the feasibility of leveraging arid land, wherever possible, over the fertile one. Given that India’s demand for electricity is only going to grow, it would be prudent to divert subsidy, tax sops, gap funding, etc. for solar projects, when time appropriate, in developing infrastructure to integrate solar plants on barren land with the grid promoting better land use.

Sun would continue to help in photosynthesis as well as activating electrons in a PV. Therefore, it’s up to us to leverage technology for a Win-Win scenario. Maximizing the urban and rural rooftops would further reduce the pressure on acquiring farmlands to meet the 100 gig target.

About the author: ​Mukul Sharma is the Director, Trading and Risk Management, Sapient Global Markets, ​a provider of business and technology services and solutions to capital and energy market participants, intermediaries and regulators.

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