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India at international Clean Energy Ministerial meeting

So that’s pretty much most of the G-20, plus a few green worthies such as Sweden and Denmark. India’s importance is underscored by the fact that the summit in 2014 will be held in India. And that’s not a day too soon in a country that Montek Singh Ahluwalia estimates is on course to notching up a long-term economic growth rate of 8 to 9%. With a billion plus population, the environmental implications of India’s energy consumption are enormous…….

the two major clean energy sources India is looking at are solar and wind. There’s good news on both fronts: recent assessments of available resources in India are that they are much larger than previously estimated. And costs are coming down.

Costs are still higher than conventional energy prices but the fall is “more impressive” than Montek estimated. He thinks that in another five or six years, these prices will edge close to conventional energy prices. There is a view that governments should wait until that happens before jumping into the clean energy switchover fray but that’s clearly not a view that Montek shares in with any degree of enthusiasm.

The global expectation is for India to be an active green energy player. To do that, India will have to carry a subsidy for a temporary period – an issue that Montek raised at the London meeting.

The cost gap can be bridged in several ways. There can be a direct subsidy or the government can buy the more expensive power at the bid price of around Rs 7 per kilowatt and sell it to the state for around Rs 3 per KW, making up the difference by pooling the cheap power that it has. Or the government can make it mandatory for distribution companies to ensure that, say, five percent of all the electricity it buys comes from renewable sources such as solar.

The bottom line is that if the country is to take the green road, then either the tax-payer has to foot the initial bill or there has to be cross-subsidy within the industry, an element of which already exists. The advantages are obvious: if you get in early enough – i.e. now – you can help create local capacity.

Making energetic efforts to tap solar energy makes immense sense in India, which receives 300 days of sunshine every year. There are ambitious plans to produce 20,000 MW of solar power by 2020, which would be increased to 100,000 MW by 2030, and further to 200,000 MW by 2050.

The Ministry of New and Renewable Energy informs us through a press release issued in March, 2012 that, “The total installed capacity of grid connected solar power in the country is reported to be 503.9 MW so far.” (Why reported to be? If the ministry’s saying it, we assume it’s correct).

If 500 MW sounds a little bit pathetic, take a look at the rate at which this capacity addition has been taking place. In 2009-10, 8.1 MW were added; in 2010-11 the figure was 25.1 MW but in 2011-12 it was an astounding 468.3 MW.

That means that from 2010-11 to 2011-12, the total installed capacity jumped by 1215.4%. Such increases tend to be one-offs and I don’t know what caused this one (if you went by that rate, India would be producing 20,000 MW of solar power by mid-2014 – well before the 2020 target).

The bottom line is that India needs to do a lot of work, and spend a lot of money to get to where it wants to be in terms of solar energy production. Transparency and certainty in policy regime will help: financiers need to know that if they are going to finance the construction and running of a costly solar energy plant on the basis of some government subsidies, then those subsidies will not be suddenly withdrawn because of budgetary constraints.

The illegality of random policy reversals was driven home in the UK in March this year, when David Cameron’s government tried to cut subsidies to the wind and solar energy industry that were offered in July 2009 by the Labour government. The subsidies went to households, communities or small businesses that decided to put up low carbon electricity technologies.

When the recession-hit coalition government tried to cut the subsidies – known as Feed In Tariffs – green energy producers and the environmental group Friends of the Earth took it to court. And won. http://blogs.hindustantimes.com/terminal-3/2012/04/30/monteks-message-on-clean-energy/

May 1, 2012 - Posted by Christina Macpherson | India, renewable