Two key determinants of energy transition - technology and finance - have space for business intervention
Will our tomorrow mirror our yesterday? Will yesterday's technologies limit the ways in which we produce and use energy? The answers point out to the importance of being ready for this transition and the kind of issues that this transition will throw up. These were amongst the various trends that Dr Ajay Mathur, Director General of TERI and Co-Chair of Energy Transition Commission discussed at a recently held Thought Leadership TERI CBS webinar.
India is faced with a formidable challenge of maintaining rapid and inclusive growth but through clean and sustainable forms of energy. When one juxtaposes this primary objective with India's commitments under the Paris Agreement, the challenges become evident. TERI's analysis suggests that the scale of transformation is very ambitious and would entail a path that has never before been followed by other countries.
According to TERI's estimates, even if all households are connected and provided with adequate electricity and steady penetration of electric vehicles occurs, the current coal based capacity, including now under construction, will be sufficient to meet the demand till 2026. The study also accounts for the retiring of 5.2 GW of coal based generation stations up to 2021-22 and even more, up to 30 GW in the subsequent five years, taking in account the plant age, environmental considerations & obsolescence of technology. Faced with this scenario and to meet the NDC goal of 40% energy through renewables by 2030, both RE generation and storage would be critical. TERI estimates that within 8-10 years, the cost of battery backed renewable power such as solar or wind could be as low as 5 INR/ unit. This, along with stricter environmental regulations and more efficient RE & storage technologies will make phasing out of fossil fuels inevitable.
What role can Indian businesses play to steer and shape this transition?
Progressive Indian businesses have always played a key role in India's transition towards low carbon development. Even today, almost 100 per cent of the investments in energy efficiency and renewable energy are ultimately made by the private sector. Two key determinants of this transition - technology and finance - have space for business intervention. The challenge that remains is how to make the process certain and low risk enough for private sector investments to flow; this requires policy interventions where businesses could share their experiences and recommendations.
Last year, the Energy Transition Commission published the global Better Energy Greater Prosperity report establishing how technology has enabled build low carbon economies at low costs while flagging some the really big challenges which we face to a low carbon economy. ETC India is a unique, multi-stakeholder platform to deliberate on and shape the energy sector transition scenarios for India for the years to come. The initiative engages with leading private and public-sector utilities and industrial firms; the banking and finance industry; policy makers, regulators and system operators; and the academic and research community.
We know that most of India's infrastructure is yet to be built. The choices we make - between business-as-usual and low carbon pathways will determine our future.