Kartik Gulati
April 30, 2020
In the global effort to mitigate climate change, India is set to play a significant, if not leading, role. In this article, Kartik explores where the country's decarbonization efforts stand right now and what it'll take to build a carbon-neutral power grid.

Climate change mitigation is a wicked problem to solve.1 Beyond the scientific question of how to limit carbon emissions and reduce polluting waste, it is also a moral question of who must lead this movement, who is most responsible for it, and who is likely to suffer the worst consequences. It is a problem encompassing complex international relations, nuanced differences in economic systems, and varying cultural lifestyles.2

India, in that context, presents an interesting paradox. Although it is a developing country with a fifth of its population (~about 270 million people) living in extreme poverty, it is already the world’s 3rd largest carbon emitter.3 The nation contributes to over 7 percent of global emissions, after China and the United States, both of which rank significantly above India on the United Nations Human Development Index chart.4,5

Figure 1: Carbon Emissions Split By Country

(Source: Union of Concerned Scientists)

Figure 2: Increase in Per Capita Power Consumption with Improvements in HDI

(Source: OurEnergyPolicy.Org)

A growing economy promises to a quarter of a billion people the status of the middle class, thereby creating energy demands leading to skyrocketing emissions.6 There is a moral equity case to be made for allowing India to achieve economic expansion through fossil fuel-driven growth similar to other developing nations as they enter the realm of prosperity.7 The planet, however, may not have enough time to recover if such a scenario is allowed to play out. Decarbonizing India’s power sector in that context holds a global significance in the fight against climate change8, given that electricity is the single most significant contributor to global carbon dioxide (CO2) emissions (electricity contributes to 66 percent of global emissions).9 It would seem unfair that the burden of saving the world’s climate has fallen on a nation failing to make ends meet for a significant portion of its population. However, India has not only lived up to these expectations but has also played a crucial part in a global fight against climate change.

Here is where India’s decarbonization efforts stand right now:

There’s more renewable energy in the Indian grid than one expects, with solar power outperforming other sectors.

Clean energy has always had a sense of Tomorrowism attached to it. Tomorrowism is a sort of skeptic optimism about an event that one believes is bound to happen, but will most likely occur glacially. In a survey of people quizzed for the due diligence of this article, 9 out of 10 individuals believed that there was less than 5 percent renewable energy in India’s power grid. However, the reality is brighter.

In 2010, India’s installed solar capacity was only 0.006 percent of its total generation capacity. Over the last ten years, solar’s installation has outpaced every single energy source in the Indian power grid, and solar alone now makes up 11 percent of the energy mix.

Figure 3: Increase in Share of Solar Energy Capacity in India (2010 – 2020)

(Source: Author’s Analysis, Power Ministry of India Data)

Solar energy sources, along with other clean sources like wind, biofuels, nuclear, hydro (large and small), and geothermal account for a sizable figure of 37 percent penetration of clean sources in the grid.10

Points scored

Figure 4: India’s Power Generation Capacity 2020

(Source: Author’s Analysis, Power Ministry of India Data)

Increasing clean energy sources has been successful due to several policy interventions.

In 2010, India launched the National Solar Mission with the sole aim of making India a global leader in solar energy. The mission set out an audacious target of a 2000X increase in solar energy over a period of 12 years, which would have totaled up to 20 Giga Watt (GW) by 2022. India is not a country famous for meeting its ambitious targets, but in this case, not only did India meet its targets, it did so a full four years ahead of schedule, in 2018.11

Several opportune market conditions supported this ambitious target:

  1. Cheap Labour
  2. Cheap Land
  3. Cheap Solar Modules

India had always had cheap land and labour but achieving cost-competitive solar panels required smart incentives, and a foreign policy that took advantage of China’s manufacturing prowess. China had figured out cheap solar modules in the early 2010s. Still, the west slapped anti-dumping tariffs on Chinese modules, hampering their growing production and further research and development (R&D), creating the perfect market conditions for chinese players to look to India as a growth market. This mix of cheap Indian land and labour, combined with cheap Chinese solar modules created the economic foundations required for a developing country to adopt renewable energy.12

As the Government of India’s 20 GW target seemed within reach, the government moved the goal post forward towards a more ambitious future – 175 GW clean energy by 2022 (Out of which 100 GW would be solar).13 The target was further moved up to a 500 GW target by 2030 (which would be roughly 50 percent of our total capacity) in June last year when there was a promising uptick in deployment.14 This progressive intent of government reflects the determination towards decarbonization, putting the clean energy requirement on an exponentially improving trajectory.

However, long term challenges remain with technology

Even though India’s grid could be 50 percent clean by 2030, the fact that the entire pie will grow (as a result of a growing economy) means the addition of  100 GW of fossil fuel-based generation.15 A net positive increase in the carbon emissions would do the planet no good even if it benefits India’s image in the global scenario. This raises the question of whether this net positive increase in carbon emissions could be eliminated by replacing all upcoming thermal plants through an even more aggressive clean energy policy.

The answer is again, wicked. Most clean energy sources are intermittent, which destabilize the grid because they fluctuate hourly, daily, and even seasonally. For, e.g., the entire output of a solar plant can fall from its capacity (say 100 MW) to zero if a sufficiently dense cloud passes over it – imagine what might happen during the monsoons if solar accounted for 30-40% of the national capacity. This is why thermal plants, technologically speaking, are still required: their ability to generate firm dispatchable power on demand, is a desirable characteristic for all generation sources.16

This is interesting, especially when looked at in the context of the demise of nuclear energy, which was once touted as the clean replacement for coal. Even though nuclear plants can produce zero-emission firm power and have gained scientific support for safety, they are still politically and culturally discarded as threats to humanity. A human tendency for negativity bias and lack of political efforts to reorient the societal view around nuclear energy is, therefore, likely to prevent the re-commercialization of the technology in the near future.17

One promising solution to intermittency is energy storage (like the lithium-ion batteries that Elon Musk’s Giga factories produce). However, most options are still nascent and costly. Signs are positive on the cost curve; yet, just last month, my team at ReNew Power won a government of India project where our hybrid (solar and wind) + battery storage power price (i.e., firm power) was cheaper than coal.18 With costs falling, energy storage is poised to play a considerable part in the future of the Indian grid, but India’s agility in being able to scale this technology still remains uncertain.19

India’s power policy needs restructuring

Power in India continues to be a state issue implying that regardless of the center’s sizeable clean energy targets, there is no binding mandate for states to execute them, which more often than not results in inconsistent policies that inhibit investment. Andhra Pradesh, for instance, canceled several PPA (Power Purchase Agreements) with clean energy projects in the state last year. This resulted in $40 Billion worth of investments put at risk because of a change in political administration in the state.20

Secondly, India’s distribution companies (DISCOMS) that buy electricity from power generating  enterprises in order to sell it to end consumers are in tremendous debt, about $740 Billion of it (~1/4th of National GDP).21 This has happened because DISCOMs are mandated to supply free electricity to the agriculture sector (size of the loss-making segment cannot be estimated because energy supplied is not metered). There is a hard cap on the price that DISCOMS are allowed to charge residential consumers. Further, power theft in India continues to be a pressing concern with complicated local transmission systems being highly susceptible to external breaches. While both agriculture and residential power policies remain valid instruments of state support for a poor population, there may be some value in thinking of alternatives to ensure financial sustainability.22

There is, however, a case for hope.

It is evident that there has been significant progress in decarbonizing the Indian power grid, and the government of India has shown serious intent in pursuing this goal with its considerable mandates. Still, several technological and policy challenges are likely to be major roadblocks in this project. Intermittency requires resolution, the energy storage industry needs promotion, nuclear energy needs rethinking as an option, and India’s power market requires restructuring for long term administrative and financial sustainability. The work ahead is immense, and it is easy to lose hope at the size of the challenge. Still, we must not forget that India has inertia and momentum on its side. In essence, India has already begun the decarbonization process, the market is sufficiently mature, most stakeholders across the chain are aligned on the goals, and the share of renewables in its grid is growing. This was no easy feat for a nation of India’s size, which quite rightly also had other pressing priorities but has, even then, chosen to participate and lead in this planetary battle. India will likely achieve its 2030 – 50 percent clean energy target. If trends are to be believed, it is also possible that an even more ambitious goal will supplant this goal as the tide continues to shift in favor of renewable sources. If the right factors work out at just the right time, India might perhaps become one of the first major economies to achieve a carbon-neutral grid, and only the fact that this possibility exists for a nation such as ours is a case enough for hope.

[1] Murtugudde, Raghu. “10 Reasons Why Climate Change Is a ‘Wicked’ Problem.” The Wire, December 11, 2019. https://thewire.in/environment/climate-change-wicked-problem.

[2] Underdal, Arid. “Climate Change and International Relations (After Kyoto).” Annual Review of Political Science, May 2017.

[3] “India’s Poverty Profile,” World Bank (World Bank, May 27, 2016), https://www.worldbank.org/en/news/infographic/2016/05/27/india-s-poverty-profile)

[4] “Each Country’s Share of CO2 Emissions.” Union of Concerned Scientists. Union of Concerned Scientists, October 10, 2019. https://www.ucsusa.org/resources/each-countrys-share-co2-emissions.

[5] “Human Development Reports.” | Human Development Reports. Accessed April 13, 2020. http://hdr.undp.org/en/composite/HDI.

[6] IEA (2019), World Energy Outlook 2019, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2019

[7] NJ Ayuk. “A Boycott of Fossil Fuel in Africa Would Be Misguided. Here’s Why.” World Economic Forum. World Economic Forum, January 19, 2019. https://www.weforum.org/agenda/2020/01/africa-oil-gas-development/.

[8] Gulati, Kartik. “Why India and China’s Energy Strategy Holds the Key to Our Planet’s Future.” Medium. Medium, July 25, 2019.

[9] IEA (2019), World Energy Outlook 2019, IEA, Paris https://www.iea.org/reports/world-energy-outlook-2019 

[10] “Policies and Publications.” Ministry of Power. Accessed April 13, 2020. https://powermin.nic.in/en/content/power-sector-glance-all-india.

[11] TNN. “India Hits 20GW Solar Capacity Milestone.” The Economic Times. Economic Times, January 31, 2018.

[12] Pickerel, Kelly. “It’s Official: Chinese Solar Cells and Modules Hit with Additional 25% Tariff.” Solar Power World, August 8, 2018. https://www.solarpowerworldonline.com/2018/08/its-official-chinese-solar-cells-and-modules-hit-with-additional-25-tariff/.

[13] A target of installing 175 GW of renewable energy capacity by the year 2022. MNRE, July 19, 2018. https://pib.gov.in/newsite/PrintRelease.aspx?relid=180728.

[14] Varadhan, Sudarshan. “India Plans to Add 500 GW Renewable Energy by 2030: Government.” Reuters. Thomson Reuters, June 25, 2019. https://www.reuters.com/article/us-india-renewables/india-plans-to-add-500-gw-renewable-energy-by-2030-government-idUSKCN1TQ1R9.

[15] Jaiswal, Anjali. “Transitioning India’s Economy to Clean Energy.” NRDC, November 6, 2019. https://www.nrdc.org/experts/anjali-jaiswal/transitioning-indias-economy-clean-energy.

[16] Llana, Karen. “Renewable Energy Intermittency: Realistic Solutions for Asia.” Pöyry global, December 18, 2018. https://www.poyry.com/news/articles/renewable-energy-intermittency-realistic-solutions-asia.

[17] Shellenberger, Michael. “If Nuclear Power Is So Safe, Why Are We So Afraid Of It?” Forbes. Forbes Magazine, September 6, 2018. https://www.forbes.com/sites/michaelshellenberger/2018/06/11/if-nuclear-power-is-so-safe-why-are-we-so-afraid-of-it/#1eedd16e6385.

[18] Parikh, Anjana. “Greenko, ReNew Win SECI’s 1.2 GW Solar, Wind Auction with Storage for Peak Power Supply.” Mercom India, February 9, 2020. https://mercomindia.com/greenko-renew-win-seci-solar-wind-auction-with-storage/.

[19] Llana, Karen. “Renewable Energy Intermittency: Realistic Solutions for Asia.” Pöyry global, December 18, 2018. https://www.poyry.com/news/articles/renewable-energy-intermittency-realistic-solutions-asia.

[20] Shah, Kashish. “$40 Billion of Renewable Energy Investments at Risk in Andhra – Opinion by Kashish Shah: ET EnergyWorld.” ETEnergyworld, August 7, 2019. https://energy.economictimes.indiatimes.com/energy-speak/40-billion-of-renewable-energy-investments-at-risk-in-andhra/3706.

[21] Silver, Caleb. “The Top 20 Economies in the World.” Investopedia. Investopedia, April 17, 2020. https://www.investopedia.com/insights/worlds-top-economies/.

[22] Thomas, Tanya. “Discom Debt to Swing Back to Pre-UDAY Level of ₹2.6 Lakh Crore in FY20: Crisil.” Livemint. Livemint, May 6, 2019. https://www.livemint.com/industry/energy/discom-debt-to-swing-back-to-pre-uday-level-of-rs-2-6-lakh-crore-in-fy20-crisil-1557139427731.html.