Why India has just ten years to decarbonise
- Dr Ajay Mathur
- 26 March 2017
- Business Standard
There are currently huge variations in energy use per capita in the world, stretching from over 200 gigajoules (GJ) per capita in the US and Australia, to only 20 GJ per capita in much of Africa. Ensuring access to affordable, reliable, sustainable and modern energy for all is critical, but this challenge is far from being met. Some 1.1 billion people now lack access to electricity and 2.9 billion to clean cooking.
The global energy system relies on fossil fuels to provide 80 per cent of total primary energy consumption, and is responsible for about 75 per cent of total greenhouse gas emissions. The expansion of an unchanged energy system, at anything close to current levels of CO2-intensity, would likely lead to over 40C of global warming by the end of the century.
The challenge is therefore to build a clean energy system that can simultaneously expand access to modern energy services on an affordable basis and tackle the environmental challenges. Specifically, that means a global energy system capable of delivering 80 GJ per capita across the world but emitting no more than 20 GT of CO2 by 2040. Such a transition in the energy system will depend on simultaneously achieving four crucial transitions: Decarbonisation of power combined with extended electrification; decarbonisation of activities which cannot be easily electrified; acceleration in the pace of energy productivity improvement; and optimisation of fossil fuel use within overall carbon budget constraints.
Electrical power now accounts for 17 per cent of total final energy demand, 37 per cent of total energy consumption and 40 per cent of CO2 emissions. Decarbonising power generation would therefore be essential even if the only emissions eliminated thus were those currently produced within power generation. But decarbonisation of power is far more important than these figures suggest, since once it is decarbonised, electricity could be applied to a far wider set of economic activities.
In India, electricity demand is likely to increase from 1,115 billion kWh in 2015-16 to 3,435 billion kWh in 2030. This demand projection may go up or down depending on the success of the UDAY programme, the "Make in India" initiative, deceleration in the use of captive power, energy efficiency, DSM programmes, etc. With improving power supply, demand projections are likely to undergo further increases, as consumers presently sourcing part of their requirements from captive power plants shift to grid power.
The power deficit has been steadily decreasing over the last three to four years, and the electricity supply available is much more than the procured demand. As per research by The Energy and Resources Institute (Teri), the energy available from renewable energy (RE) sources, storage hydro, nuclear and gas plants (existing as well as under construction and after considering retirements) would suffice to meet the remainder of the national-level demand for electricity during the next seven to eight years. This would in other words mean that no new coal plants would be needed and the plant load factor of coal-based plants would be 78-80 per cent in 2024-25 and 2025-26.
Global research shows that the cost of firm renewable electricity (renewable electricity + battery) is on a steady decline and would stabilise at around $70 per MWh, or about ~5 per kWh. In case this price goal is achieved, or nearly achieved, by 2023-24, and if appropriate infrastructure to absorb large amounts of renewable energy, together with batterybased balancing power, is in place, then all new capacity addition could be based on renewable energy. This would imply that over 850 Gw of renewable energy would be in place by 2030.
On the other hand, if this price goal is not achieved, the growth in demand would be largely met by new coal capacity additions, with a limited number of new renewables. In this low renewables scenario, an additional 115 Mw of coal capacity would come online between 2026 and 2030, and total renewable capacity would be about 285 Gw.
The move towards renewable energy presents a great opportunity for India to transition to a low-carbon economy. Overall benefits and successful achievement of the RE target can only be realised by focusing on multiple fronts of the RE ecosystem such as indigenous manufacturing, project management, and grid integration.
Growth in indigenous manufacturing of RE components can coincide with the growth in RE installations. The focus should be on increasing the competitiveness of Indian manufacturers on a par with international players. This can be done by addressing issues on several fronts, such as incentivising development of new production technology which can reduce cost, lowering cost of finance, long tenured loans for RE production units, creating local raw material supply ecosystem, and higher allocation for R&D on RE technologies, along with industry-wide collaboration for reducing time of commercialisation.
The Indian grid must adapt to the new challenges of high installed base of variable RE sources. The focus should be on developing more efficient evacuation infrastructure, forecasting infrastructure of RE, developing balancing capability, accounting for costs related to balancing, and introducing market mechanisms.
The move towards a decarbonised India and the world will need a major shift in the mix of energy system investment, and a coherent and stable policy framework. Between now and 2027, there is a 10-year window in which these transitions and decisions can be made. And the time to act is now.