Co-innovation, Net-zero targets will potentially shape key policy considerations to India’s renewable energy expansion

By expanding the renewable energy installed capacity two and a half times in the last six years, India has made remarkable progress in strengthening its energy access and energy security goals. In the recently held third Global Renewable Energy Investment Meet, the Indian Prime Minister has also highlighted that the country is all set to further expand its non-fossil fuel based power generation to an all-time high. As the domestic policy momentum can catapult India as the major producer of clean energy, it is important to understand what the challenges and opportunities arethat the country will encounter in its future trajectory.

First, with regard to the climate commitments, India remains to be one of the fewer countries that can potentially achieve a 2 degree goal. Under the Paris Climate Agreement, the country has also committed to reducing its emission intensity of GDP by 30 to 35% by 2030 from that in 2005 levels. In addition, the country also has committed to promoting renewable energy sector and aimed at boosting the installed capacity to 175GW. India’s Nationally Determined Contributions (NDC) also positions that it would get 40% of the total installed capacity in power sector from non-fossil fuels. For all these above stated goals, the country’s energy sector policies are critical and is expected to play a proactive role as was seen the past few years.

The country’s total renewable energy installed capacity was estimated at80GW in 2014 and with active policies to support the sector, the same has reached over 138GW in early 2020. This also indicate the huge potential for the sector to expand further. According to NITI Aayog, the policy institution under the government, the country’s large untapped renewable energy potential which include over 750GW solar, over 300 GW of wind could help meet the sector’s huge development plans. However, there are three sets of challenges India will need to address to meet its climate as well as clean energy goals. First, developing supply lines for equipment and machinery; second, addressing the concerns pertaining to domestic coal sector; and third managing a sustainable recovery from the pandemic.

India has been heavily dependent on external supplies of renewable energy equipment and machinery. According to estimates, Chinese firms supply bulk of the imported equipment used in the renewable sector. In solar sector alone, the country imported equipment worth US$1,179.89 million during the first eight months of fiscal year 2019-20. Continuing this dependency will affect in two ways. This will post a permanent challenge to the domestic industry which has been struggling to grow; anda much awaited domestic industry expansion to cater to the employment generation plans could continue in hibernation. Changing this remains to be one of the major prerequisites for achieving exponential growth of the renewable energy sector. In order to achieve that, the country needs to not only enhance the capacity of the domestic equipment industry, but also make available the needed technology, raw material supply as well as enabling policy environment. With regard to policy environment, the central government’s support for setting up new facilities for manufacturing renewable energy equipment in states is one of the notable welcome steps. This also need to be accompanied with policies and investment that encourage innovation and collaboration in the advanced technology arena. Coinnovation – jointly developing, manufacturing and scaling up - will need to be promoted with countries that have advanced technology. Collaboration with countries like Japan will not only help bring in advanced technology to India, but also will lead to its cost effective production and manufacturing which will be a win-win business model for both.

Second, renewable sector’s expansion is extremely important in the context of achieving a net-zero emissions, especially for countries like India that have been heavily dependent on fossil fuels to meet their domestic energy demand. Among Asian countries, Japan, China and Korea have announced their respective target date for achieving net-zero emissions. With regard to India, a feasible target to achieve the same may not be any soon, primarily due to the fact that there has been heavy dependence on coal generated power. Achieving the same will be contingent on how soon the country will be able to direct adequate investment in the alternative energy sectors as well as developing adequate technology. The emissions from energy sector as well as from industry and transport will need to be systematically addressed and a long term plan needs to be developed by India towards this.

Third, the pandemic has brought in significant level of damage to the country’s economy as well as human health. Resuming to the normal business activities especially in the industry and manufacturing sector is a bigger challenge as several states are facing a second wave of the pandemic. India has already announced three stimulus package which makes the cumulative economic recovery amount equivalent to 15% of the country’s GDP. Here the key question is about the pathway India plan to choose in terms of implementing its long term economic recovery. Though the pandemic had made remarkable level of damage, it is important for the policy makers to grab the opportunity redesigning the domestic policies towards energy sector. The policies should contribute a sustainable recovery, while keeping in view a pathway that can aim for net zero emissions. This also gives an opportunity for the country to actively promote innovation in all spheres of economy with an objective of reducing environmental footprint. Promoting domestic manufacturing of renewable energy equipment and machinery will also take into account the environmental impacts and devise strategies to minimize the same.

India’s renewable energy expansion plans can help in strengthening clean energy access of millions of people while also making the country a major player in the global energy equipment and machinery market. In order to achieve this, co-innovation at an institutional level need to be promoted by the government, and while the development of renewable energy sector contribute to a potential net zero target, greater focus will be needed on the life-cycle emissions of renewable energy sector and its impact on the environment. Dr Nandkumar Janardhanan is Research Manager, Climate and Energy and Regional Coordinator, South Asia at Institute for Global Environmental Strategies, Japan. He is also fellow at the Institute for Australia India Engagement, Brisbane.

By Dr. Nandakumar Janardhanan