Humanity’s path to becoming the dominant species on earth has primarily been due to our ability to generate and control large amounts of energy beyond which our bodies can produce. The vast majority of this external energy—historically and even today—has been released through combustion, specifically the burning of biomass, both fossilised, like petroleum and coal, as well as simply dehydrated, like firewood and dung cake. Only in the last 150 years or so have we learned to control a more efficient and flexible form of energy—electricity. However, even this electricity has been mainly generated through combustion in thermal power plants. In the age of man-made global warming, it is important to remember that combustion releases air pollutants that harm our health and greenhouse gases (GHG) that contribute to the planet’s heating.
Currently, India’s energy sector accounts for 68.7% of GHG emissions. These are the by-products of the combustion economy that presently powers our lives and economy. Notably, much of this energy is imported, putting a question mark on energy security. In 2022-23, 89% of crude oil, 44% natural gas, and 21% coal was imported, and all this was when India’s per capita energy use is one-tenth of countries like America and less than one-fourth of the global average.
Clearly, we need to produce more energy domestically, and do so more cleanly than we have managed thus far. If we intend to meet our commitment to being Net Zero by 2070 and attain energy independence by 2047 while keeping our economy growing and continuing to improve citizens’ lives, we must transition from a combustion economy to an electron economy. We have here the chance to make huge gains by enhancing energy security, reducing pollution and health costs, improving the availability of and access to energy, and mitigating the climate crisis.
In a combustion economy, we use multiple sources and channels to meet our energy needs. We use the electricity grid to light and condition our homes, gas pipelines or gas cylinders (or biomass) to cook food, petrol pumps to drive our vehicles, and a combination of energy sources to run our factories. In this economy, electricity plays a relatively minor role. Currently, only 19% of all the energy consumed in India is in the form of electricity; the remaining 81% is the direct use of coal, oil, gas, and biomass.
In an electron economy, electricity is the prime mover and is generated directly by clean sources. According to multiple modelling studies, to achieve Net Zero by 2050, the world must meet 50-70% of its energy demand from electricity, and 70-85% of this electricity should be supplied by renewables. How realistic is it for India, where all clean energy sources only provide 6% of the energy supply, to meet a large majority of its energy needs through non-fossil electricity?
In the last 10 years, renewable electricity has grown at 16.1% annually and has reached 31% of the total installed capacity. The installed capacity of all non-fossil fuel sources is now 43.7% of the total. This trend will continue, and renewables will become India’s dominant energy source.
The biggest challenge of renewable energy sources is their intermittency, which can only be resolved by the wholesale adoption of energy storage systems. Fortunately, the cost of renewables has been dropping rapidly in India over the last few years to the point where solar energy is already cheaper than coal, historically the cheapest source of electricity. While there have been hiccups now and then, there is a secular trend towards falling prices. This is also visible in the cost of battery storage, which has fallen by 80% in the past five years and is projected to drop by 60% in the next decade. The result of these cost reductions is already visible. The round-the-clock (RTC) renewable energy cost has fallen to Rs 4.5/kWh. If this trend continues, RTC will be competitive with new coal power in India in 2025.
The final piece of this puzzle is green hydrogen, produced with renewable electricity. Its availability is crucial to decarbonise the hard-to-abate industries and heavy transport sector. The biggest impediment to its production till now was the high cost of renewable electricity. With falling renewable prices and government incentive programmes, green hydrogen is slowly becoming a reality.
While renewable-plus-storage is increasingly looking more economical, the true benefits of a modern decarbonised electricity system lie in changing the nature of the grid. We need a smart grid that allows real-time generation and transmission management in response to demand.
India’s interest in such solutions has so far been motivated by the need to reduce energy theft and transmission losses. As a result, India has largely prioritised demand-side smart metering with limited investment in power supply coordination. Investing in an overhaul of the grid not only lays the ground for decarbonisation, it also makes economic sense. As part of its stimulus package after the 2008 financial crash, the US government invested $3 billion in smart grids. The investment returned $6.8 billion in economic benefits, including 50,000 new jobs and $1 billion in additional government revenue. This is one of the highest ‘multiplier’ effects for any government infrastructure investment.
In addition, the transformative potential of renewable-plus-storage-plus-smart-grid is highest in areas currently under-served by the grid. Investing in these under-served communities will bring significant socio-economic returns. It will also drive innovation in the sector, reducing the cost of modern power. Finally, it will reduce the air emissions generated by burning biomass in these regions, and contribute significantly to improve poor air quality and the health of women in particular who suffer from inhaling cooking smoke.
India needs to move at full speed toward an electron economy for the people and planet. We must seize this opportunity to be at the cutting edge of the coming transformation.
Ther writer is President and CEO, iFOREST