India chooses electricity and economics over emissions goals

India’s formal climate pledge to the United Nations ahead of this year’s Paris summit highlights the crossroads at which the country’s electricity sector finds itself.

On one hand, there is a very strong push to deliver more energy from renewable resources, as demonstrated by India’s pledge to source 40% of electricity from non-fossil sources by 2030.

But while emissions reduction is important, providing electricity to the people appears to be the more pressing issue – as perhaps shown by India’s decision not to set an overall emissions-reduction target in its UN pledge. It has opted instead to set a clean energy goal and to pledge to cut the emissions intensity of its economy by a third by 2030.

With India expected to surpass China’s population by 2050, one of the key issues is to deliver electricity to those people who are currently without it. That will mean expanding its existing electricity generation assets, as well replacing those that are being retired.

President Narendra Modi is a huge fan of renewables. During his time as chief minister of the state of Gujarat, he oversaw India’s largest solar program. But delivering the same on a national level will be much harder.

Economic intensity

Renewable energy will also be crucial if India is to hit its other new target of reducing greenhouse emissions per unit of gross domestic product (GDP) by 33-35% by 2030 on 2005 levels. This builds on its existing target of a 20-25% reduction by 2020. That policy is already credited with encouraging coal companies to shift their thinking. Adani, for example, is establishing facilities to manufacture solar panels.

India has a range of schemes already in place to help drive these goals, such as the National Electricity Policy and the Integrated Energy Policy. These policies are further supported by market mechanisms including Renewable Energy Certificates – similar to those issued in Australia and elsewhere to encourage renewable energy.

Power to the people

Despite India having the fourth-largest electricity sector in the world, many areas of the country are still not serviced at all. On a global scale, 24% of people in the world who have no access to electricity live in India. This, rather than economics, is the real reason behind India’s renewables push.

In areas not covered by the national grid, 18% of primary energy comes from biomass, which is a very inefficient energy source.

India already has a renewable energy target of 41.2 gigawatts by 2017, increasing to 72.4 GW by 2022. As at March 2014, the installed capacity was 29.5 GW, which illustrates the ambition of its targets.

Most of those areas where the electricity is needed do not have an existing distribution network. The easiest way to set up and supply these areas is likely to be through solar and wind, although India is also promoting nuclear power. Six reactors with a 4.3 GW capacity are currently being rolled out.

If India can achieve (or even partially achieve) its goals, it will involve setting up new electricity networks, many of them independent “microgrids”. While the aim is to have a single national grid (with US$6 billion set aside for this), that may prove too difficult within the time frames being discussed. Instead, the electricity sector will get a valuable opportunity to learn how new renewable energy networks can be created.

Being realistic, India itself has coal assets and will continue to use these domestically, but has also stated a desire to stop importing coal within three years. This is another very ambitious target, given India’s current level of imports and its need to increase electricity generation at the same time as cutting out foreign coal. The decision, however, is again largely driven by economics, with domestic coal at US$24 a tonne compared to Australian imports at US$62 a tonne.

With India becoming a global economic powerhouse, it needs to build a reliable electricity infrastructure that provides power to both its residential and industrial base. It is not a question of whether it can achieve this, but when. That will deliver significant emissions reductions, albeit as a happy byproduct of India’s development agenda.

Craig Froome does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.