India’s transition from fossil fuels to renewable energy- challenges and solutions

Source: The post India’s transition from fossil fuels to renewable energy- challenges and solutions has been created, based on the article “Electricity: A strategic view” published in “Business Standard” on 5th August 2024

UPSC Syllabus Topic: GS Paper 3-infrastructure- electricity

Context: The article discusses India’s transition from fossil fuels to renewable energy, highlighting the need for substantial changes in the electricity and financial sectors to meet net zero targets by 2070. It emphasizes market-based approaches and financial reforms for effective climate action.

For detailed information on Energy Transition in India read Article 1, Article 2

What is the current state of renewable energy in India?

1. Current Share: Renewable energy (RE) constitutes about 20% of India’s electricity generation.
2. Growth Rate: The annual increase in RE’s share is only 0.3%, far below the needed 3% to meet future targets.
3. Private Sector Focus: Private investments are shifting from fossil fuels to RE, especially for commercial and industrial consumers.

How significant is the electricity sector?

1. The electricity sector is immensely significant in India’s transition to renewable energy.
2. Projects “under implementation” in the CMIE database show that the total value of private non-electricity projects is similar to that of electricity generation projects alone.
3. To achieve net zero by 2070, India must significantly decarbonize by 2050, with electricity playing a crucial role.
4. The sector needs to support electric vehicles and GDP growth.

What challenges are being faced by the electricity sector?

1. Government Over-reliance: There’s a belief that the government will build all necessary infrastructure in a coal-intensive way. Despite NTPC’s large thermal plant investments, public finance and management are inadequate to meet the massive electricity demand. Climate change pressures will further increase costs.
2. Insufficient Private Sector Contribution: There’s a misconception that the private sector is building enough renewable energy (RE). The private sector mainly sells electricity to commercial and industrial buyers, avoiding government entities. This limits RE growth and highlights the need for a significant overhaul in grid infrastructure.
3. Complacency and Historical Methods: There’s a reliance on past methods of managing the energy sector, which is becoming increasingly unsustainable. Although officials have managed to keep things working, mounting stress from various sources and slower economic growth make this approach less viable.

What are the solutions?

1. Market-Driven Electricity System: Shift from centrally planned to a price-based system to encourage private investment in generation, storage, and distribution. For instance, afternoon low prices can incentivize storage companies to charge batteries.
2. Increase Renewable Energy (RE) Share: Aim to grow RE’s share by 3 percentage points annually, significantly higher than the current 0.3%.
3. Adapt the Grid: Invest heavily in reshaping transmission and distribution for RE flexibility, addressing the slow scale of RE commissioning.
4. Engage Private Sector: Encourage private investments in RE targeting commercial and industrial sectors due to their avoidance of government entities.
5. Reform Financial Sector: Develop a market-based financial system to attract global capital for energy projects, learning from the past infrastructure investment wave (1996-2011) that failed due to forced mobilization.

Question for practice:

Examine the challenges and solutions for the electricity sector in India’s transition to renewable energy.