MASTERCLASS > CEF Analysis

Bring India’s energy transition closer to communities

As the severity of the impacts of our misuse of natural resources continue to mount, the issue of climate change is finally occupying prime real estate in our collective consciousness. Communities around the world are beginning to demand policies and actions that will yield a more habitable environment. It is no longer about preserving the planet for future generations, but rather making it liveable for us, here and now. Fuelling our industries, lighting our homes, and having access to mobility solutions is essential, but the energy sources we use to do so could make a significant difference to the quality of our lives.


Economics has been, and is, the principle driver of household demand in India, and the perception around renewable energy and other clean energy applications has continued to be – good but expensive! Despite this, India is undergoing an energy transition, with a fast-growing share of renewable energy not just in deployed capacity (21% of total power capacity) but also in electricity generation (9% of total electricity generated and consumed). A bulk of this clean energy development in the country has been through government-led commissioning. While large-scale deployments are likely to continue, it is demand for currently underserved consumer-linked solutions such as rooftop systems, electric vehicles, and distributed renewable energy applications, which would define the pace and timeliness of the energy transition.


In order for consumers and communities to become drivers of the energy transition, rather than mere passive spectators, the incorrect perception of clean energy being an expensive prerogative of the rich needs to be debunked. The transition needs to create value for people for them to lead it. And it does, in three distinct ways.


First, transitioning to cleaner energy results in savings. Researchers at the Council on Energy, Environment and Water (CEEW) find that households can save as much as 95 per cent on their electricity bills (over a 25-year period) if they owned a solar rooftop system. Even those who do not own their house or have access to a roof, can save as much as 35 per cent by buying power from a community solar rooftop PV plant. Similarly, moving towards an electric fleet for public and mass transport can result in significant savings, per kilometre, for consumers.


Secondly, the energy transition gives communities agency, to boost productivity through enhanced self-reliance. Farm power availability in India is a third of that in China. My colleagues’ pioneering research finds that in the farm sector, clean energy has the potential to mechanise many activities including irrigation, fertiliser application, seed-sowing, and cold chain. This could reduce input costs and improve agricultural productivity. Similarly, more than four million rural micro-enterprises suffer from lack of reliable electricity supply. With the energy transition, renewable energy-powered energy-efficient machines could help meet existing demand and significantly boost rural businesses such as automobile repair, furniture manufacturing, jewellery making, poultry farming, and tailoring. The market size of the opportunity to support livelihoods in rural India with clean energy innovation exceeds USD 50 billion, in addition to the productivity benefits accruing the farm and MSME sectors.


A unique characteristic of India’s energy transition is its additive nature, such that all renewable energy capacity is additional to existing power capacity due to growing demand. As a result, the renewable energy sectors create jobs, direct, indirect, and induced, which are additional. Similarly, total vehicle ownership is expected to rise to 175 cars per 1000 people in 2040, up from the current 20 cars per 1000 people. Thus, the third clear benefit of the energy transition is job creation, especially as the country battles a severe unemployment epidemic. The workforce directly employed in the Indian renewable energy sector grew seven-fold in the past three years, rising from over 13,800 workers in 2015-16 to nearly 100,000 workers in 2018-19. Demand-driven sectors like solar rooftops create many more jobs than utility scale solar and wind energy due to their decentralised nature. Over 38,600 workers were employed for just 3.8 GW of installed rooftop solar, as compared to around 37,900 workers for 26.2 GW of utility scale solar and over 23,300 workers for 35.6 GW of wind energy. Similarly, if there significant domestic manufacturing of electric vehicles, there is a large jobs opportunity. Our estimates suggest that with 30% penetration of EVs by 2030, and even without battery pack assembly, 1.57 million jobs could be created in four-wheel powertrain manufacturing alone.

 

These direct benefits are further supplemented by induced benefits such as reduction in air pollution and reduced healthcare burden on the exchequer due to a reduction in short-lived and long-lasting climate pollutants. Communities value these benefits, but lack of awareness, targeted business models, financing structures, and behavioural nudges, have kept them from becoming a driver of the transition. The energy transition offers an opportunity. It is the people of this country that will determine if they participate and benefit from it, or watch from the sidelines and resist the change.