Thomas White Global Investing
Green Reports

July 29, 2009

The Green Report


India Hastens Renewable Energy Development
India Hastens Renewable Energy Development

Books lay scattered all over the table. It’s exam time. The boy narrowed his eyes further, trying to read his textbook in the flickering yellow light of a candle. But the strain was taking its toll on him after an hour of intense concentrating.

This is the scene in most parts of urban India, where power blackouts are frequent, especially during sultry summers. In villages, the rural folk may have their cellphones, but they have to talk in darkness as most areas are painted black with no access to electricity. A few installations, including cellphone network towers, continue to run on noisy, diesel-powered generators that add to the inky blackness with their thick smoke.

India is a country of contradictions. It is the world’s fifth largest primary energy consumer but an estimated 56% of India’s 1.1 billion population lead lives separated from electricity. India’s per capita energy consumption is among the lowest in the world (35 times lower than in the U.S.) and yet it ranks sixth in total annual energy consumption. Adding to this, India manages to be the world’s fourth largest emitter of greenhouse gases. The bulk of the country’s power comes from coal, which accounts for 40% of its total greenhouse gas emissions. As coal deposits are constantly being depleted and as worries increase over climate changes, India is being forced to look elsewhere for power. Yet today in India, renewable energy, predominantly wind and biomass, constitute only 3% of the country’s total electricity production. And solar energy takes up a mere fraction of that percentage. Recently, Gauri Singh, joint secretary in India’s Ministry of New and Renewable Energy, commented that “India is growing faster than anyone can imagine. Renewable energy will have to supplement conventional power supply.”

And it now appears that India is taking a leap forward to embrace renewable energy. Earlier this year in March, India joined the International Renewable Energy Agency (IRENA), becoming the largest energy consumer in the multi-nation organization. IRENA was launched in January to help governments and private industries expand renewable energy installments worldwide. According to a United Nations Environment Program (UNEP) report titled ‘Global Trends in Sustainable Energy Investment 2009,’ India witnessed a 12% increase in investment in clean renewable energy like wind, biomass and hydro projects. The wind energy sector grew by 17% last year. But it is estimated that most of the investment has come from the private sector. For example, in a small town named Dhule in Maharashtra, Western India, one of the world’s largest wind farms with a capacity of 1,000MW, is making its debut thanks to the efforts of a private enterprise.

Solar energy holds yet more promise, given India’s rich reservoir of sunlight (5,000 trillion kWh annually). Currently, solar power generation is drawing increased attention through the government’s announcement of feed-in-tariffs (FiTs), which are incentive structures meant to encourage the use of renewable energy. As well, the country has mandated that commercial buildings use solar energy to fuel 25% of hot water needs, while state power distribution companies are now required to purchase slices of renewable energy. Another initiative is the ‘Solar Cities’ plan, in which the government plans to cut down the usage of energy from conventional sources by 10%, through the use of renewable energy. A total of 60 cities are targeted, with the government providing financial support of up to $103,000 for each solar city. Meanwhile, in 2008, India announced the National Action Plan on Climate Change in response to global warming concerns. At the heart of the plan is the National Solar Mission, which aims to harness India’s year round rich sunshine and step up the use of solar energy to 20,000 megawatts (MW) by 2020.

Yet, while India has taken many steps on the renewable energy road, there is still work to be done. When the U.S. Secretary of State, Hillary Clinton, visited India recently, she praised the country’s efforts towards the development of renewable energies. But her appeal to take on specific carbon emission targets was rebuffed by India’s environment minister, Jairam Ramesh.

With a GDP growth rate of 8% per year India’s emission rate is fast on the rise. And unless it is checked, India may be destined to live out its ironic and contradictory existence – a country that has plenty of sunshine but is more often than not plunged into darkness.

 

 

 


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