Context: India’s focus on energy security and clean energy transition in the recent budget.
What is the present status of India’s energy sector?
- Fossil and non-fossil contribution:
- Total generation including renewable sources (trends)
- India's energy demand will continue to provide fuel for future economic growth and is bound to grow exponentially in the coming years.
- At present the country is world's 3rd largest consumer of oil, 3rd largest LPG consumer, 4th largest LNG importer, 4th largest refiner, 4th largest automobile market.
- India is likely to account for 25% of global energy demand growth over the next two decades.
- India’s final energy demand is expected to double to about 1,200 Mtoe (millions tonne of oil equivalent) by 2070.
- The report titled ‘India’s energy-transition pathway: A net-zero perspective by FICCI and Deloitte India’, has projected that the country requires a massive $15 trillion in investments to achieve its net-zero emissions target by 2070.
Issues in India’s energy sector:
- Uneven Distribution of Energy Resources which further lead to regional disparities in energy availability and consumption.
- Over Dependency on Fossil Fuels as still India’s more than 50% of electricity generation comes only from fossil fuels.
- Renewable Energy Integration into the grid poses challenges due to their intermittent nature.
- Energy Access is also an issue in remote and rural areas having rugged terrain & topography.
- Financial Health of DISCOMs in India is also not good as they are facing financial stress, leading to issues in maintaining and upgrading the electricity distribution infrastructure.
- Global and Geopolitical Factors such as fluctuating oil prices and geopolitical tensions, can impact India's energy security and prices. This becomes significant in the backdrop of the fact that India meets close to 88% of its crude oil requirements through imports.
- Sustainability: Balancing economic development with environmental sustainability is a critical challenge
This is one of the reasons why India has been focusing on energy transition. In fact, in last year’s Budget (2023-24) government had provided for ₹35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security.
Recent budget announcements in this regard:
- Commitment to meet net zero by 2070 — viability gap funding for wind energy (offshore); setting up of coal gasification and liquefaction capacity, phased mandatory blending of CNG, PNG and compressed biogas; and financial assistance for procurement of biomass aggregation machinery.
- Rooftop solarisation — one crore households will be enabled to obtain up to 300 units of free electricity.
- Adoption of e-buses for public transport, and strengthening the e-vehicle ecosystem.
- A new scheme of bio-manufacturing and bio-foundation.
Challenges in India’s clean energy transition:
- Intermittency and Grid Integration: The integration of intermittent renewable energy sources like solar and wind into the grid poses challenges in balancing supply and demand, as these sources depend on weather conditions.
- Land Acquisition: Securing suitable land for renewable energy projects, especially large-scale solar and wind farms, is a challenge especially in densely populated regions. This can also impact the land use.
- Financial Viability and Investment: The high upfront costs of renewable energy projects, coupled with financial constraints, can hinder the rapid deployment of clean energy technologies.
- Energy Storage Technologies: Efficient and cost-effective energy storage technologies are crucial for storing excess energy generated during peak times and supplying it during periods of low renewable energy production. Developing and implementing such technologies at scale is a challenge.
- Logistics: For e.g. India’s waste collection is highly informal which becomes a huge challenge in the way of biogas generation. Preliminary processes like collection, transportation, and segregation limit it’s adaptation.
- Lack of support from Discoms: For e.g. Discoms have been reluctant to aid rooftop solar installations as they fear a loss of revenue with consumers moving to another energy source.
- Geopolitical factors: Supply chain disruptions in critical minerals can affect the renewable and EV revolution.
What can be a way ahead in this regard?
- Regional approach should be followed. For e.g In North India has a huge scope of biogas, western Indian has scope of solar energy. Similarly coastal states and Ladakh region has huge wind potential.
- Domestic manufacturing of critical components is necessary to reduce import dependence.
- Energy efficient storage systems should be built to manage the issue of intermittency. India can leverage innovation in lithium-ion batteries and battery recycling technology to enhance energy storage capabilities and optimize renewable energy utilization.
- Recycling & repurposing: Along with battery recycling, India has begun repurposing used batteries into sustainable 2nd-life Battery Energy Storage Systems (BESS), saving 98% of GHGe compared to making new batteries.
- Experts also feel that a separate body can be built on lines of GST council with States as members to ensure uniformity in terms of regulations and policies.
- Financing: Nationalised banks should offer easy financing options with affordable interest rates, for e.g. under the PM Suryodaya Yojana, facilitating broader access to capital for installation.
- Role of Discoms: Discoms should conduct extensive awareness campaigns and technical workshops to educate potential beneficiaries and also streamline the process of providing solar and net meters to reduce installation time and expedite project completion.
- Bilateral negotiations are necessary to ensure supply of critical minerals. E.g. Indo-Australia critical mineral investment partnership.
Steps already taken by Government of India:
To achieve its target of 500 GW in renewable power capacity by 2030, India has implemented various measures:
- Waiver of transmission system charges for inter-state solar and wind power sales,
- Establishing renewable power purchase obligations, and creating Ultra Mega Renewable Energy Parks
- Support to domestic manufacturing through Production-Linked Incentive (PLI) schemes.
- Setting up of innovative green energy trading platforms such as the GTAM (Green Term Ahead Market) and GDAM (Green Day Ahead Market). These platforms enable renewable energy developers to sell power on the open market without signing long-term Power Purchase Agreements.