NEW DELHI :
India’s emerging green economy will require additional investments of around $80 billion till 2022, growing more than threefold to $250 billion during 2023-30, said the Economic Survey 2019, which was presented in Parliament on Thursday.
The investment estimates, which have been made at current prices, come at a time when India has become one of the top renewable producers globally with ambitious capacity expansion plans. The country has an installed renewable energy capacity of about 80 gigawatts (GW) and is running the world’s largest renewable energy programme with plans to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments.
“Thus, on an annualized basis, investment opportunity for over $30 billion per year is expected to come up for the next decade and beyond," the Survey said.
The push for green energy also comes against the backdrop of the Organization of the Petroleum Exporting Countries (Opec)-plus arrangement extending its compact for production cuts. The production cut extension will have a wide-ranging impact on energy markets, given that Opec accounts for around 40% of the global output. It is expected to have a particular fallout on India due to the Opec accounting for around 83% of the country’s total crude oil imports.
India is ranked fourth and fifth, globally, in installed capacities for wind and solar power, respectively.
With competitive solar bids and India’s wind energy sector having transitioned from a feed-in tariff regime, which ensures a fixed price for wind power producers, to tariff-based competitive auctions, obtaining finance at the lowest cost has become key.
“The solar tariff has come down from around ₹18/kWh in 2010 to ₹2.44/kWh in bids conducted in 2018. Similarly, for wind power, the tariff has declined from an average of ₹4.2/kWh in 2013-14 to ₹2.43/ kWh in December 2017," the Survey said.
The global energy landscape has been rapidly evolving. In a huge leg-up for green energy investing, the London Stock Exchange (LSE) has classified oil and gas stocks as non-renewable energy. The move marks a fundamental change in the global investment culture against the backdrop of growing climate concerns with several countries focussing on renewable energy.
Also, multilateral and bilateral agencies as well as sovereign wealth funds have been ceasing investments in businesses that contribute to climate change. The LSE move follows the decision of Norway’s Government Pension Fund Global (GPFG), the world’s largest sovereign wealth fund, to stop investing in oil and gas explorers globally.
The Survey added that a two-and-a-half times increase in India’s per capita energy consumption will help it grow the real per capita gross domestic product (GDP) by $5,000 (in 2010 prices). Also, if India has to achieve the human development index (HDI) level of 0.8, the per capita energy consumption has to quadruple.
This comes against the backdrop of India using only around 6% of the world’s primary energy despite it having 18% of the world’s population even as the National Democratic Alliance (NDA) government has set an ambitious task of becoming a $5 trillion economy by 2024-25. The Survey said that the ‘problem of energy poverty has been more pervasive than income poverty".
“Energy intensity of India’s GDP has been declining in the recent past, which is reflective of increases in the efficiency of energy use. However, India cannot become an upper-middle-income country without (i) rapidly raising its share of the global energy consumption commensurate with its share of the global population, and (ii) ensuring universal access to adequate modern commercial energy at affordable prices," the Survey added.
India has also emerged as the voice of consuming nations amid global uncertainties in the energy markets with supplies from Iran and Venezuela drying up and tension escalating in the Persian Gulf. This also comes at a time when the overall size of the energy efficiency market in India is estimated to be $22.81 billion, according to the Survey. Also, the implementation of various energy efficiency measures has resulted in total cost savings of around ₹53,000 crore in 2017-18 and contributed in reducing 108.28 million tonnes of carbon dioxide emission, primarily from marquee schemes such as perform, achieve and trade (PAT) programme, Unnat Jyoti By Affordable LEDs for All (UJALA) and the Standards and Labeling Programme.
“The overall electricity savings due to energy efficiency measures is 7.21% of the net electricity consumption in 2017-18, total thermal energy saved is 2.7% of the net thermal energy consumption and 2.0% of the net energy supply," the Survey said.
Having greater energy efficiency is crucial for India that is now the biggest emitter of greenhouse gases after the US and China, and which is also among nations most vulnerable to climate change. India plans to reduce its carbon footprint by 33-35% from its 2005 levels by 2030, as part of its commitments to the United Nations Framework Convention on Climate Change adopted by 195 countries in Paris in 2015.