If you ever had to consider the contradictions in what a country says, and where it puts its money, consider the rosy predictions of renewable energy in India, and the much more aggressive predictions of increase in oil consumption. So what could finally happen?
Hope versus pragmatism. Short term versus the long term. Vision versus reality. Call it what you will, but something is wrong with all the energy projections going around for India. On the one hand, you have rosy predictions for the renewables industry, on the back of the government’s ambitious target of 175 GW of renewables capacity by 2022. On the other , you have equally ambitious projections for India’s crude oil appetite, with numbers ranging from 9 to 10 million barrels per day by 2040. More than twice the figure for 2018, at 4.7 million barrels per day. More importantly, while big numbers are thrown up around the need for investments in renewables, in non renewable energy, ACTUAL investments of well over $70 billion are already in the pipeline for the period till 2025, between top state (ONGC, IOC, BPCL, Oil India )and private sector refiners like Reliance Industries.
70% of diesel consumption is by the transport sector. The remaining is mostly by the captive power sector, a sector that should see demand fall within the next decade itself, if one goes by the electricity generation that will happen from renewables, besides other capacities coming up in coal, nuclear and more. And promises of more dependable power supply. Almost all of India’s petrol consumption comes from transportation sector.
Depending on which policy actually moves ahead, it seems safe to project that 30% of new vehicle sales in 2030 will be electric. By 2040, that figure should be anywhere between 70% to 100%, depending on government will and public awareness and business imperatives. Yes, irrespective of the pace of change in India, global auto makers are already moving to be ready for the electric future.
So with such drastic change coming in, how does an Indian Oil Corporation (IOC), or a Reliance Industries predict a doubling of fuel consumption? More worryingly, they are actually putting their money where their mouth is. Plans for the massive $44 billion (Rs 3 lac crore) West Coast oil Refinery that would be able to process 60 MT per annum are at an advanced stage. IOC’s group company, Chennai Petroleum is also in the process of expanding its refinery capacity at Narimanam to nine million ton per annum at an outlay of about Rs 30,000 crore. Other major players, be it ONGC or even BPCL continue to move ahead with massive capex plans in the tens of billions of dollars. That’s reality, while it is no one’s case that for the next decade or more, demand will rise to feed a growing economy, to expect it to keep growing has to be considered plain unsustainable, and steps taken now to arrest that.
Renewables on the other hand, seem to have hit a speed bump. After the massive increase in targets for 2022, the renewables push has run into the standard bureaucratic red tape or rules, changed rules, and some more rules. So after almost increasing the target a second time from 175GW to 225 GW, doubts are being cast on achieving the 175 GW number in the first place. Categories like rooftop solar, where 40 GW rides, are way behind schedule and numbers. Take for example, the national capital region which under its Delhi Solar Policy 2016 had outlaid a budget of Rs 60 crores for Generation Based Incentive (GBI) for a period of three years. But, has so far disbursed only 1% of the amount in two years. With just 2 GW out of a possible 40 GW target for 2022 achieved, the miserable performance in rooftop solar indicates the challenges for any sector with a heavy policy overhang. A rough rule of thumb for solar is a cost of $1 million for every megawatt of capacity. Or a billion dollars for every GW. An amount that the government is pushing developers to raise almost completely as risk capital, while expecting them to make commitments for 15-25 years on power pricing and maintenance etc. In a growing economy, it remains a workable option, but only for the well funded, and unfortunate fact that is already leading to a thinning of the major players. This possible reduction has its own consequences, as we can see with the governments own threats to cancel, where they see the ‘possibilities’ of price collusion. Truly a choice between the devil and the deep sea.
Wind Power, the other great hope on which 60 GW capacity flutters, is stuttering. In 2017, new windmill installations fell to a five-year low between April 2017 and March 2018, according to data from the Indian Wind Turbine Manufacturers Association (IWTMA). The country saw an addition of just 1,762 megawatts (MW) of capacity, a sharp fall from the record high of 5,400 MW in the preceding year. India’s total wind energy capacity now stands at 34,042 MW, in terms of statistics the fourth largest installed wind capacity in the world but still only a little more than halfway through Prime Minister Modi’s ambitious 60 GW 2022 target. Plagued by delays and major policy changes by the government, the wind sector which supposedly has a 127 GW offshore potential according to National Institute of Wind Energy (NIWE) will need more than just a boost to achieve its target.
Lets face it. Even as countries at the forefront of the fight against climate change are bringing forward their targets, India and China, thanks to lower per capita emissions have negotiated a far longer period for themselves. But, in an ever changing scenario, if the possibility exists to speed up our progress too, it should be taken with both hands. Because when it comes to the climate fight, as we are increasingly seeing, the brunt will be faced by these countries, and doing more will definitely help us, before anyone else.