India is the world’s third-largest energy consuming country driven by rising incomes and varying patterns of consumption. Energy use has doubled since 2000, with 80% of demand still being met by fossil-fuel sources. This energy demand is bound to grow further as India will soon be the most populous country in the world. Since, the energy sector contributes to ~40% of India’s GHG emissions, it is imperative to adopt a systematic approach to meet the energy requirements of over 1.4 billion people while being cognizant of the associated climate impact. The world is in a climate emergency state as clearly visible in terms of erratic monsoons, frequent cyclones, extreme heat waves, wildfires etc. This thus mandates for an immediate climate action plan as nobody can afford it to be postponed to 2040-2050 timeframe. Being one of the world’s fastest growing economies, India’s choices, from a global perspective, will determine the world’s success or failure on climate change.
Decarbonizing India’s energy sector will require a multi-faceted approach with renewables replacing fossil fuels, reducing CO2 emissions from existing capacity through enhanced efficiencies & technologies and focusing on carbon sequestration for unavoidable carbon emissions. To lead the world’s energy transition agenda, Hon’ble Prime Minister Narendra Modi, at the COP26 summit at Glasgow, has committed India to an ambitious five part “Panchamrit” pledge-four of these are specific goals for 2030:
a) to reach 500GW of non-fossil electricity capacity;
b) to generate 50% of all energy requirements from renewables;
c) to reduce emissions by 1 billion tons from now to 2030; and
d) to reduce emissions intensity of GDP by 45%.
The fifth pledge in Panchamrit commits India to net zero emissions by 2070. India’s five commitments will play a critical role in world’s transition towards clean energy and to limit the overall rise in temperature to below 1.5˚C as set under the Paris agreement. But this would require a humungous investment in terms of capital and technological know-how. It demands a paradigm shift in assessing the changes required as also a robust framework to implement the sustainability roadmap and a transition to net-zero economy.
Net-zero India can save lives, catalyse new industries, create millions of jobs, drive trillions of dollars of economic value and can provide a significant heft to India’s role in the global combat against climate change. According to a recently released IEA report, the country’s transition to a net-zero economy could create over 50 million jobs and contribute more than $1 trillion in economic impact by 2030 and around $15 trillion by 2070.
India’s green transformation is an integral and promising part of the overall economic transformation of the country and there is a newfound optimism reflected at both state and central levels. The Union Budget 2022, announced by Finance Minister Nirmala Sitharaman on February 1, 2022, outlined reforms and initiatives towards boosting the domestic manufacturing of solar power equipments, battery swapping, decentralised renewable energy among others. The budget provided an additional 19,500 crore towards production-linked incentive (PLI) scheme for domestic manufacturing of solar cells and modules, raising the existing PLI scheme to 24,000 crore- thus translating into creating an additional manufacturing capacity of upto 45 GW in the country. To encourage domestic production, the budget also proposed to raise import duty on solar cells from 20% to 25% from April 1, 2022. Impetus on Green bonds for meeting the financing needs of clean energy projects and inclusion of battery storage systems under infrastructure category are some other initiatives that will augment Government’s push towards reducing India’s carbon footprint.
The green transition will be boosted by technological development, evolving regulations, consumer preferences and investor sentiment. More sophisticated renewable solutions (hybrid+ thermal, storage, bundled solutions) are emerging to address the challenges of infirm renewable power. The rise of utility-scale renewable projects is supported by evolving regulatory approaches that encourage pairing solar with other generation technologies or storage systems, to offer “round the clock” supply solutions. There is a significant work underway to promote battery storage, hydrogen and mechanical storages in the country. The government has recently announced green hydrogen policy-waiving off the inter transmission charges for the projects commissioned before 2025.
Despite these policy interventions and initiatives, there are few challenges that need to be addressed to unlock the full growth in power sector. The biggest challenge is the distribution sector that continues to be the weakest link and demands a long due reform. The Electricity (Amendment) Bill 2021 once passed in the Parliament, is targeted to strengthen the financial health of the power sector. Other challenges that need attention are related to land acquisition, regulatory approvals, contract sanctity and strengthening of transmission infrastructure in the country.
India is home to one of the youngest populations in the world and the rising consciousness on climate action is driving a significant shift in consumer preferences towards clean energy sources. India needs to mobilize large and sustained flow of domestic and global capital to meet its climate ambitions and Sustainable Developments Goals 2030. Investors are recognizing a progressive policy ecosystem that reduces risk perceptions and brings greater attention to renewable energy growth.
Tata Power is firmly committed to India’s renewable growth story and is one of the first organizations to declare its Carbon Neutrality aspiration before 2045. This entails no fresh investment in greenfield or brownfield coal plants and a significant growth in its existing non-carbon generation portfolio from 30% to 80% by 2030 to usher in an era of clean energy in the country. In addition, the company has been contributing significantly towards e-mobility with 1300+ EV charging stations already installed across country. To fuel the energy-enabled economic growth in remote villages of India, Tata Power has made significant investment in setting up microgrids across such areas. Tata Power is also setting up 4GW solar cell and module manufacturing capacity with a capital commitment of ~3400 cr and plans to complete it by next year end. With renewable focused growth trajectory, Tata Power is best positioned to enable energy transition in the country, including all the stakeholders in this momentous journey.
Climate Change is a priority and India has set ambitious plans and targets to march towards energy transition. However, all stakeholders- the government, businesses and regulators need to come together and put forward the desired policy framework and sectoral reforms in the absence of which the complete value unlock and the energy transition will be difficult to achieve.
(Dr Praveer Sinha is the CEO & Managing Director of Tata Power. Views expressed are personal.)