India’s energy security - Key challenges and the way forward

India’s energy security – Key challenges and the way forward

India is on a path of rapid economic expansion. With GDP expanding at a rate of 6-7 percent per year for the past decade, India has shown a strong growth potential and is expected to continue at this rate in the coming decades. 

Using global technological breakthroughs in information technology such as the Internet of Things, Artificial Intelligence, and so on, as well as hardware areas such as advanced electronics, India’s GDP can leapfrog. 

The majority of technological developments require electrification and power as primary drives. Consider Green Hydrogen production, a significant decarbonization project on which India is focused. Hydrogen is a substantial component of the industrial fuel mix and is used in a variety of industries such as steel, refinery, and fertilizer. 

Currently, conventional power plants provide the majority of India’s electricity. India has done an admirable job installing approximately 168 GW of renewable energy.

However, India’s GDP development and decarbonization efforts necessitate a large amount of power. Particularly since India’s “Make in India” and “Atmanirbhar Bharat” efforts have targeted a 25% GDP pie in manufacturing – as opposed to roughly 15% today – manufacturing demands massive power usage. For GDP development to be sustained and robust, there is certainly a need to build power plants to fulfill the resulting high power demand. In order to reconcile GDP development with environmental concerns, renewable energy facilities must be installed.

As a result, improving India’s energy security becomes critical. Given this, solar and wind power appears to be potential agents. India receives 300 days of sunshine per year and 5000 trillion kWh of solar energy per year (equal to 2500 GW at present efficiency levels). Furthermore, switching to renewables allows you to hit two birds with one arrow.

 First, it sustains India’s GDP growth and moves it to a cleaner country area, bringing in greater growth with a cleaner environment. Second, it lessens our reliance on fossil fuels, which account for a significant portion of India’s imports. Thus addressing India’s import dependency for power and the overall import expense. MNRE (Ministry of New and Renewable Energy) proposed a plan to reduce reliance on fossil fuels.

Installing this much solar energy capacity will necessitate a significant purchase of solar modules from China. This definitely demands the installation of large-scale solar modules and upstream manufacturing capacity in India. 

It does, however, confront its own set of obstacles. Except for solar modules and cells, India has virtually little capacity for solar materials. For example, there is currently relatively limited commercial-scale wafer capacity. The same is true for polysilicon, the basic material used in the manufacture of solar wafers.

 Capacity in India is also extremely restricted in ancillary materials such as aluminum frames, glass, back sheets, and so on, which constitute the key cost elements of a solar module. India is significantly reliant on imports for all major solar value chain raw materials. 

Further investigation reveals that the primary equipment used to manufacture solar panels and upstream materials is virtually absent in India. They are either imported from Europe or China. This puts us in a dangerous situation because we lose cost control and remain sensitive to the whims of foreign technology businesses.

 This, in turn, may cause us to fall short of our aim of obtaining energy independence. PLI (Production Linked Incentive) and SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors) are two schemes that can help. Clearly, the government is putting a lot of effort into developing solar energy capabilities in India.

A substantial barrier is also faced by India’s grid infrastructure, which needs to be significantly upgraded to accommodate the fluctuating and intermittent nature of renewable energy. Grid infrastructure should be prioritized with a high level of electrification. 

The Indian government approved an INR 2.8 lakh crore (USD 35 billion) program for inter-state transmission network infrastructure development to evacuate renewable energy. 

Other significant hurdles include India’s EPC competence to execute solar and wind projects on a scale of 50s to 100s GW per year, as well as the purchase of land for large-scale renewable projects in areas where India possesses fertile land farms for agricultural use. 

Financing is another critical component in the whole scheme of things. The Reserve Bank of India (RBI) has prioritized lending to the renewable energy sector. Although the government has been making steady progress in the right direction, more has to be done to strengthen administrative levers such as stronger land laws, legislative execution, and program management. 

This will contribute to the creation of an environment that attracts critical low-cost foreign capital to India, particularly “patient” capital, where capital providers consider long-term returns on investments. Solar energy is critical to India’s development story.

 Although great progress has been made in terms of installations and government programs to encourage the installation and local production of solar equipment, more has to be done to bring India’s energy independence to a level that makes it fully self-sufficient. A concerted effort between the government and private sector can make India an “environment-friendly developed nation”.

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