Evaluating the India renewable energy opportunity

Abstract

India is the largest democracy with an estimated population of about 1.04 billion and is on the road to rapid economic growth. During 1981–2000, it witnessed an impressive GDP growth rate of around 6%/yr (TSL, 2001). Dominic Wilson and Purushothaman of Goldman Sachs write in their paper (2003): ‘‘India has the potential to show the fastest growth over the next 30–50 years. Growth could be higher than 5% over the next 30 years and close to 5% as late as 2050 if development proceeds successfully.’’ As India continues to grow at a consistent rate of 7-8 percent, energy security has become a core focus.1 A key determinant of success for India is achieving an optimal balance among (1) energy security, (2) economic growth and (3) environmental concerns.2 To achieve energy security, India has started focusing on the energy and power sector of the country; for energy is a key input to the Indian sustained economic development saga. The relationship between energy and economic development is best illustrated by research conclusions that point to a strong inverse correlation between the percept of population living below the poverty line in developing countries and electrification Electricity is currently and is touted to be, in future, the biggest primary energy consumer for India. The current electricity supply/demand deficit of India is around 8%, with a peak-demand deficit of about 12%. And, as yet, a large part of the country is not connected to the grid.4 Demand Supply Surplus/Deficit Energy 279,266 million units 255,974 million units -8.3% Peak demand 95,583 million units 83,309 million units -12.8% Table: Indian power scenario, April 2006-September 2006 As demand for energy continues to outstrip production at home, India has emerged as a major buyer of energy, either through trade or investments in countries with rich fossil fuel sources around the world.6 Achieving the government’s vision of electricity for all by 20127 has become a mammoth task, requiring capacity additions of more than 100 gigawatts (GW) to take installed capacity to more than 225GW. And with the population forecasted to reach 1.4 billion by 2030, installed capacity will need to reach 400GW by that year, requiring an annual growth of 5%.8 Thus there is an urgent need to focus on sustainable and cleaner energy9 fuels and test their feasibility. Though there has been considerable amount of work in this field, there still is a remarkable gap between potential and achieved energy conversion, especially in renewables. This report attempts to sketch the current energy scenario in India, plot India’s position in the global energy scenario, identify key stakeholders in the Indian energy sector and glimpse into the future of the Indian energy landscape, with special reference to renewable sources of energy (and within it, solar energy).