Looking at the increasing activity levels in clean energy space, questions are often asked: Are clean energy technologies the appropriate choice for meeting our energy needs in future? Can they solve the problems of energy access and energy security?

As we look at them today, clean energy technologies suffer from many disadvantages. The most important issues pertain to high costs and high variability. Since power can?t be stored, clean energy options such as hydro, wind and solar face problems of mismatch between generation, which is dependent on climatic variables, and actual demand patterns for power.

Clean energy technologies, however, offer very attractive features despite above problems. Clean energy resources don?t need replenishment and are much bigger sources, by many orders of magnitude, than fast depleting fossil fuel reserves. We have to make a shift from fossil fuels as they are simply insufficient for meeting our future energy needs

The real issues with clean energy technologies at present are low conversion efficiency and high conversion costs. However, the costs of most clean energy technologies are falling rapidly driven by improving conversion efficiencies, low cost manufacturing and larger volumes.

Wind energy: Wind generation costs are falling, as we move to larger (2-5 MW) machines with hub heights of 125 M, and low cost manufacturing in India and China. The investment cost/KWhr generated has declined, for southern states in India, from ~$0.55/KWhr to $0.40/KWhr, making it viable for IPP generation.

Solar energy: Solar Photo-voltaic (PV) conversion efficiencies are improving. With Concentrated Solar Photovoltaic (CSPV) efficiencies go as high as 23%. At the same time, the cost of manufacturing and system integration is falling. For example, in Western India, for polycrystalline PV, unit investment intensity has dropped from $2.5/KWhr to $1.65/KWhr and for a-Si thin films to $1.5/KWhr. In next four to five years the costs are expected to touch < $1.0/KWhr, at which point the solar generation will be close to grid costs. In solar thermal area efficient cycles such as stirling engine or high temperature systems (inlet 1,000 ?C+) have improved conversion efficiency to 25%+. With low-cost manufacturing in India and China, the investment costs may decline, in five-eight years, from $4/W today to <$2.0/W resulting in unit investment costs < $1.0/KWhr.

Biomass: Varieties with better yield/acre and high climatic adaptability are being developed with productivity improvement of four-five times. Combined with wasteland availability, low cost manpower in developing countries, even today, biofuels could be produced at <$0.7/litre. This may drop to <$0.4/litre, which is competitive vis-?-vis fossil fuels. Biomass can be digested biologically or chemically to produce methane, liquid fuels or hydrogen, which with fuel cells, can have high conversion efficiency (45%-70%) and low costs.

Fuel cells: From system costs of $1,000/KW (2002), fuel cell costs have fallen to <$ 100/KW. The target of $35/KW may be realised in near future. Technologies such as fermentative hydrogen production, enzymatic hydrogen generation, electro-hydrogenesis, artificial photosynthesis (recent collaboration of MIT with TATA group) are rapidly evolving, leading to reduced costs of hydrogen production and therefore overall costs of power from fuel cells.

Most clean energy solutions offer distributed generation capabilities?small scale, local generators, meeting local electrical and thermal energy needs. They can avoid costly transmission and distribution. Almost 30%+ capital in modern electrical power systems is invested in transmission, and 30-40% of generated power is lost in transmission to users. They also avoid environmental costs of mining, processing, transporting and consumption of fossil fuels.

As can be seen, various clean energy technologies will start to be competitive vis-?-vis grid in 5-20 years time, provided appropriate policy framework supports scaling up and investments:

* Demand generation through measures such as Renewable Portfolio Obligations (RPO).

* Price support through trading of renewable certificates

* Easy access to low-cost and long-term finance

* Policies to help investments in technology (special funds, tax benefits) and manufacturing (special zones dedicated to manufacturing with income tax and VAT benefits)

Whereas good progress has been made in the first two areas, the last two need further work in India.

IPCC estimates that we can achieve 80% penetration of clean energy globally, by 2050. Annual investment levels required for this are – $500-700 billion in next decade and then $1.0 trillion+. This is not significant in the global context where this amounts to -1-2% of global GDP. Much more is spent on wars!

Vinod Kala is managing director, Emergent Ventures India, and jury member of the FE-EVI Green Business Leadership Awards 2010-11