The key challenge in these endeavours is to transform the electricity sector from being a key polluter to a net zero emitter. Currently, electricity generation accounts for 70% of coal use, while coal-based electricity constitutes 75% of total generation in the country.
Replacing coal-based electricity and meeting the growing demand will require a considerable volume of renewable capacity, which, in turn, has implications.
Let us begin with the case of solar power generation. While the cost of photovoltaic cells has come down dramatically, electricity generation is limited to the period when the sun shines. In a year, this works out to around 18-20% utilization of the panels, compared to 80% for a coal-fired plant. Thus, at an asset creation level, a 1MW coal power plant is equivalent to 4MW solar panel capacity.
Hence, the initial investment required is greater, as much as four to five times more than for a coal-based plant. This brings forth a significant challenge—garnering long-term climate finance at a low interest rate. Industrialized countries must provide this, and Indian policymakers much aggressively engage in this direction.
A just way to mobilize funds from the Global North is to put a small annual parking fee of, say, $1 per tonne of carbon dioxide parked in the global atmosphere by each country from 1990 onwards, the year when preparations for the Rio Earth Summit started and greater global awareness on the perils of climate change emerged. This approach recognizes the fact that the stock of greenhouse gases (GHGs) is causing warming in greater dimensions than annual emissions.
Another key challenge with augmenting solar capacity is that of land availability on the scale required to meet the demand. No doubt, rising cell efficiency will reduce land needs. For example, an efficiency of 30% compared to current levels of 20% will reduce land needs by 30%. Appropriate policy incentives for rooftop installations in domestic and industrial establishments, roadside areas and on water bodies, too, will help reduce land needs.
Apart from high upfront investment, renewable generation sources also suffer from their inability to be available at all times of the day. No doubt, the intermittence in solar generation is lower than in the case of wind power, which is far more erratic and less predictable. However, that still leaves the challenge of providing reliable, continuous supplies to consumers.
The balancing options include battery energy storage systems (BESS), pumped hydro plants, particularly off-river plants, flexible operations of coal and nuclear plants and importing power from our neighbours, namely, Nepal and Bhutan, which have large hydro capacity. Battery storage is expensive, though lithium ion-based batteries are getting cheaper.
This throws light on the emerging energy security horizon at a geopolitical level—imports of lithium will rise, while that of oil from the Middle East will decline. Given China is a dominant owner of lithium reserves across the globe, a large dependency on lithium may raise concerns about energy security and may not be acceptable to India.
Meanwhile, hydel resources have their challenges, too—the availability of electricity from hydro plants depending on the flow of the river.
Growing our nuclear power generation capacity will help meet the twin objectives of moving away from fossil fuels and meeting the rising electricity demand. However, our experience with nuclear plants has been that they are seldom completed within the allocated cost and time estimates.
Policy measures are required to introduce greater managerial efficiency for timely delivery of these projects.
The net-zero power challenge can be approached from the other end of the pipe as well, namely, carbon capture and energy efficiency.
Carbon capture use storage (CCUS) is currently expensive and, besides, there are limited options for its use. The storage capacity of CO2 is estimated to be quite small as well.
Energy efficiency, on the other hand, has been successfully implemented in the Indian context. Energy labelling has helped consumers make informed choices while purchasing products. For the business-to-business segment, industries have an opportunity to produce energy-efficient equipment that is globally competitive. However, by and large, these gains are incremental in nature, given the country’s energy needs to grow economically to meet its human development goals and the large and growing aspirational class.
At an economy level, going beyond electricity, the net zero challenge will require oil and gas supplies to be substituted as well with non-polluting options. The popular emerging choices are electricity and green hydrogen.
Electric vehicles can significantly curtail the consumption of petroleum products. However, for heavy-duty trucks, shipping and airplanes, use of electricity is not practical as the range required will call for ‘onboarding’ of large battery capacity, which is not exactly feasible. Meanwhile, the shift of two-wheelers and three-wheelers and cars to electricity will increase the demand for electricity and put pressure on the electricity systems to deliver efficiently.
Green hydrogen requires green electricity, or electricity sourced from renewable sources by splitting water. Currently, the costs are very high. Yet, for some of the hard-to-abate CO2 emissions sectors like steel, it currently seems to be almost the only alternative. In the medium term, it is likely to remain only as a niche option.
As a robust energy system evolves, especially involving decentralized electricity networks, operating them will require a workforce with new skills. This will require capacity building, both at the Centre and state levels. While policies have been formulated, they need to be followed up on to ensure efficient and fast-paced implementation. Further, the budget should remove distortions in the energy market, bring petroleum products under the goods and services tax, eliminate dual pricing of natural gas and usher in market-determined prices, and incentivize states to replace power subsidies with direct money transfers.
Kirit Parikh is chairman, Integrated Research and Action for Development (IRADe). Views are personal
