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Emerging from 2023 with a highly successful G20 Presidency and a climate Conference of Parties with deep clean energy commitments, India stands at the forefront of a revolutionary transformation in its energy landscape, propelled by the imperatives of a surging economy and a growing population. The stakes are global, with India’s energy policies bearing substantial significance in the realms of climate change and sustainable development. As the world’s third-largest energy consumer and importer, India grapples with the challenge of enhancing energy consumption to uplift living standards in a rapidly urbanizing economy, while also addressing the needs of rural India through bespoke policies.

In this critical decade, India must address the energy trilemma — ensuring security, sustainability, and affordability — together. It needs to secure its energy sources to reduce external dependence and ensure energy reaches all at affordable prices without being an environmental burden. As the journey unfolds, challenges are intertwined with vast opportunities for job creation, sustainable growth, and solidifying India’s leadership on the global energy landscape.

Ensuring Energy Sustainability with Renewables

The trajectory of India’s sustainable energy future is illuminated by the pillars of Renewable Energy (RE), particularly solar and wind power. We cannot transition away from fossil fuels in the next few decades if we do not substantially increase our renewable capacity. This is the core imperative of ensuring energy reaches all citizens and drives India’s economic development.

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When it comes to renewables, solar energy has taken the lead in India. The country has gone from 2,000 MW of solar power capacity in 2010 to 72,018 MW in 2023. India’s geographical advantage positions it uniquely for solar energy exploitation. The government’s commitment to developing solar parks and promoting decentralized solar systems, especially in rural areas, with a focus on driving livelihood applications and indeed tapping into solar energy in ways that avoid conflict with land use — rooftops, farmlands, and captive land — is commendable. This approach not only drives growth in the renewable sector but also ensures energy democratization. In fact, a recent study by the Council on Energy, Environment, and Water (CEEW) found that over 25 crore households across India have the potential to deploy 637 GW of solar energy on rooftops. At around 3.2 GW, Gujarat houses nearly 30 per cent of India’s current rooftop solar capacity, the highest in India. At the same time, India’s wind energy sector, which seeded the renewable energy industry in the country — both by creating manufacturing opportunities and deployment of technology — is seeing a much-needed revival. Wind capacity addition in FY23 doubled compared to FY22 and stood at 2.3 GW (vs. 1.1 GW in FY22), and it has already touched 1.5 GW during the first half of FY24. Old wind turbines, which dot the landscape in high-potential areas such as Gujarat, Tamil Nadu, Karnataka, among others, and also tapping into the vast potential for offshore wind energy, which can be more reliable and complement the demand pattern of the country. Our quest for round-the-clock electricity sources will require us to tap into wind potential and balance solar energy effectively.

Both these sectors will also generate significant jobs. A CEEW-NRDC-SCGJ analysis shows that if India meets its commitment to install 500 GW of nonfossil fuel-based energy capacity by 2030, it will generate jobs for one million people.

States have been at the front and center of hastening India’s clean energy transition. Gujarat, for instance, recently released its Renewable Energy Policy 2023. The policy aims to augment the state’s RE capacity in line with the national target of 50 per cent non-fossil fuel-based installed electricity capacity by 2030. To achieve this target, the state estimates investments worth INR 5 lakh crore that utilize approximately 400,000 acres of land.

Building Energy Security by Diversifying Non-Fossil Energy Sources

Amid the centrality of renewable energy (RE) in India’s energy transition, a diverse energy mix, including nuclear and hydroelectricity, remains pivotal. Simultaneously, investments in smart grids and energy storage systems become imperative to manage the variability of renewable energy and ensure grid stability to keep our economy powered.

On the supply side, this includes investing in the future of nuclear energy and hydroelectricity. Recent years have seen the uncertainties that come with large hydropower projects — availability of water and unprecedented meteorological events that have the potential to nullify significant investments in the sector. A recent report from the Central Electricity Authority (CEA) highlights that an additional capacity addition of 389 MW of large hydropower capacity is prospectively required till 2030, apart from the capacity of 11,494 MW of hydro projects which are currently under construction.

Charting the role of new hydro projects in the power system and also ensuring important riverine ecosystems in areas with hydro potential are maintained must be the prerogative of central and state policymakers. Similarly, India has publicly funded nuclear programs that must now be harnessed to deliver an annual addition in the gigawatt scale each year. The establishment is mature, and the trained human resources exist for India to be able to aim for this scale. In addition, there is a need for a large infusion of resources into indigenous R&D that addresses the emerging opportunity of small and modular reactors with increased safety that could potentially mitigate the need for long timelines for site acquisition in clusters and can distribute the technology across the geography.

Jump To Renewables Needs Energy Storage and Smarter Systems

Just as important as these technologies are investments in smart grids and energy storage systems that would be fundamental for managing the variability of renewable energy and enhancing India’s power grid stability. Smart metering has already become the centerpiece of the reform of the power distribution sector. India has understood that to drive cost-recovery, demand management, and nudging the adoption of energy efficiency in retail consumers are key.

While India may be a slower adopter of energy storage, on account of the high cost of the technology, its critical role in integrating high levels of renewables into our power mix is now well established. As has been proven with clean energy capacity deployment, the right set of regulations, incentives, and market design can also make the energy storage market thrive. It can create an adequate installed base that will leverage new provisions in the ancillary services market and take the benefit of time-of-day reflective tariffs that will increasingly become common across consumers.

Decarbonising Indian Industries for A Net-Zero Future

Yet another significant need and opportunity lie in decarbonizing industrial energy. While the industry’s contribution to GDP has remained steady over the years, there are global headwinds that will impact its competitiveness in exports and, indeed, the survival of traditional processes and products. CEEW studies show that hard-toabate sectors like steel and cement will require an additional capital expenditure (CAPEX) of USD 627 billion to achieve netzero carbon emissions.

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India must drive innovation and the widespread adoption of clean electricity, energy-efficient technology, low-carbon fuels, and materials. This can be achieved through a combination of policies and regulations such as the National Green Hydrogen Mission, Renewable Purchase Obligations, Energy Storage Obligations, Green Open Access Rules, among others, as well as market-based instruments such as emission standards and the carbon credits trading scheme. India’s ambitious Green Hydrogen Mission (the second-largest in the world) is an example of thinking at scale, which can pave the way for investment and projects. The ongoing design of the Indian Carbon Market can also create new opportunities for several industrial sectors. Of course, overcoming infrastructure constraints and streamlining regulatory processes is vital in providing industry stakeholders certainty while making new investments.

Making Energy Affordable for All

As India enters a new phase of growth that will see it edge closer to being a developed economy, the country will need to balance growth with equity. A sustainable energy future involves addressing energy inequity by making it affordable, transitioning to electric cooking technologies, and driving electrification in transport. This will ensure our transition is citizen-centric. India has achieved remarkable strides in advancing energy accessibility. In 2015, at the commencement of the Sustainable Development Goals, India held the record for the highest number of individuals globally lacking access to electricity. Over the past decade, approximately 700 million Indians gained access to clean cooking energy, while around 350 million obtained electricity access for the first time.

The largest burden of energy inequity today is arguably the sustained use of solid fuels in poorer households. A CEEW-T20 report estimates this number to be around 447 million people in India. The Pradhan Mantri Ujjwala Yojana (PMUY) has been a phenomenal success in delivering close to 10 crore new LPG connections in a span of seven years. But the commodity still remains out of reach for many poor households, and the sustained use of LPG remains a challenge as refills are expensive. In the short to medium term, sustained and substantive subsidies targeting poorer households will need to be continued. This will enable them to witness the multiple benefits of adopting clean cooking. In the long term, shifting preferences to electric cooking technologies, investing in R&D to improve efficiency, usability, and compatibility would be important. Notwithstanding new technological developments, in a future that is nearly 100 per cent electric, this transition is a certainty.

Propelling India’s EV Revolution

Simultaneously, shifting away from fossil fuels requires improving our public transport systems and transitioning to electric vehicles (EVs). India has clear policies aimed at driving the electrification of transport through two rounds of the FAME scheme. A third phase of FAME is in the pipeline with a budget outlay of INR 26,400 crore . The impact on the ground is evident. A CEEW study shows that states with EV policies incorporating consumer incentives experienced a 2X market growth compared to states without such incentives . Larger incentives are also associated with more visible market growth. States with higher incentives, such as Assam, Goa, and Gujarat, recorded a nearly 20X growth in the six-month period after the notification of their incentive policies.

The more recent PM-eBus Seva has placed the focus squarely on improving public transit and electrifying it in smaller towns. This should be the way forward to ensure that smaller towns, which will drive urban growth in the decades ahead, learn from the challenges that larger cities face in creating affordable mobility options for all with a lower environmental footprint. This approach also sets an example for other developing countries whose trajectories can be much different from the developed world’s focus on private car ownership.

Moreover, the focus of electrifying the transportation system must be on creating a domestic manufacturing ecosystem that continues to maintain India’s place as a global manufacturing powerhouse for automobiles. Today, a large number of small and medium enterprises contribute to the success of India’s automobile sector, especially for two- and three-wheelers, and they must be supported in making the transition to electric vehicles. However, this is also as much an opportunity ripe for newer firms to emerge and establish new paradigms in transporting people and cargo. The benefits of electrifying transport are significant — it weans India off the critical import dependency on crude oil and improves environmental and public health outcomes in already crowded cities. A CEEW study estimates a 16 percent reduction in oil demand leading to savings of INR 1 lakh crore in the oil import bill if 30 percent of the vehicle stock is powered through electricity by 2030.

India’s energy revolution is not just a national imperative but a global gamechanger — and India can become a green superpower. From harnessing solar and wind power to revitalizing nuclear and hydroelectricity, India charts a diversified path. Smart grids and energy storage amplify the resilience of renewable sources, while electrifying transport and decarbonising industries mark bold strides towards a sustainable future. As India steers towards being a developed economy, balancing growth with equity becomes paramount. The commitment to innovation and a skilled workforce ensures India’s leadership in the global energy landscape, promising not just challenges but a surge of opportunities for a greener, brighter tomorrow.

Views expressed by: Arunabha Ghosh and Karthik Ganesan

Arunabha Ghosh is the CEO, and Karthik Ganesan is the Director of Research Coordination at the Council on Energy, Environment, and Water (CEEW).

(The views expressed are personal.)

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