People may now be ready for a renewable revolution

Synopsis: Cheap, reliable and clean energy are means to fulfil the energy demand and these will determine the success of the global climate action movement.

Introduction

The random power cuts that last 5-7 minutes hurt commercial operations more than the long-scheduled cuts.

This is especially true for small-scale industrial outfits with basic operational setups (like power loom shacks) that employ a vast majority of workers in India.

What is the reason behind increased power cuts?

The post-covid boom in economic demand: it is coupled with flooding in coal-producing regions. It has led to major shortages of coal at power plants across the country.

High dependence on coal: By October, some coal plants had dangerously low stocks of only two days. Given the global energy supply crunch, the precarious situation of coal plants in India could prevail for the next six months.

Government interventions to mitigate the pressure on coal supply: temporary closure of some power plants and reduced electricity supply, particularly across rural India.

What has led to decreased production of coal?

Increased investment in renewable energy (RE) technology: This is partly because the economics of new coal plants does not make sense. Most of the 33 gigawatts (GW) of coal power generation capacity under construction and the 29GW in pre-construction stage will end up as stranded assets.

No new coal plants: According to a report authored by Kashish Shah, there have been no new coal plants announced and no movement on the 29GW of pre-construction capacity in the last 12 months.

Which factors are responsible for the growth of RE sector in India?

Cost of electricity: coal-fired power cannot compete with the ongoing cost reductions of renewables. Solar tariffs in India are now below even the fuel costs of running most existing coal-fired power plants.

Favourable investment climate in the renewable energy sector: India has set a target of 450GW of renewable energy capacity by 2030. The government has been taking sustained steps to attract foreign investment partnerships, partly as an antidote to the weak debt financing ecosystem.

Policy support: Existing regulation allows 100% foreign direct investment in renewable energy projects, without prior government approval. A $600-million incentive scheme for new solar power projects will boost the production of polysilicon, wafers, cells and modules over the next five years.

Economic, environmental and moral imperatives for foreign investment: India is the third largest carbon emitter after the US and China. However, its per capita energy consumption is a third of the world average.

What is the way forward?

First, the government must read the headwinds and introduce fiscal incentives like tax breaks and excise relaxations for research, development and production of renewable energy technology, particularly off-shore wind and hydro power.

Second, future elections could be fought over power, but this time, it could be the public making the power cuts.

Source: This post is based on the article “People may now be ready for a renewable revolution” published in Livemint on 29th October 2021.