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Business News/ Opinion / Views/  Our energy transition opens up vast opportunities for India Inc

Our energy transition opens up vast opportunities for India Inc

Sustainable technologies and innovative business models coupled with market and policy reforms make a case for optimism

Photo: BloombergPremium
Photo: Bloomberg

Climate change is one of the greatest challenges that the world is facing today. Addressing a calamity of this magnitude requires a rapid transformation towards a green economy and sustainability. The global action required to address climate change requires a fundamental transformation of all key sectors, including energy, which accounts for a large part of greenhouse gas emissions.

There has been a strong momentum to transform the energy system in the past decade: 195 countries adopted the first-ever universal and legally binding global climate deal, the Paris Agreement, in 2015. The set targets will require a major revamp of global energy production and consumption. For this, attention is firmly fixed on decarbonization of energy systems with renewables playing a central role.

Many countries have embarked on their net-zero and energy transition journeys. India is leading by example. Our Prime Minister Narendra Modi laid out the country’s commitments to scaling up climate action at last November’s CoP-26 Summit with the Panchamrit statement.

The Indian energy sector is currently in a state of transition, witnessing changes in generation and consumption patterns. As per data from the International Energy Agency (IEA), electricity demand in India is likely to triple by 2040. Renewables will play a critical role in meeting this demand.

Installed renewable power generation capacity in India has increased at a fast pace over the past few years. The landmark milestone of 100GW renewable energy (RE) capacity was achieved in August last year, which was an epic moment. A total of 158GW of RE capacity projects (including large hydro) have been installed in the country. India now stands fourth globally in wind power, fifth in solar power and overall fifth in installed renewables capacity. Further, the country’s focus on energy storage, electric vehicles (EVs), hydrogen and fuel cell technologies will act as a key enabler for our transition to a clean, low-carbon energy system.

The government has taken several initiatives to promote the RE sector in India. These include permitting foreign direct investment (FDI) up to 100% under the automatic route, its waiver of inter-state transmission system charges for solar, wind, hydro and green hydrogen projects until 2025, and the setting up of RE parks, among many others. Policy measures such as the Green Energy Open Access Rules 2022, Green Hydrogen Policy, production linked incentive scheme, the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-Kusum), etc, reinforce the government’s commitment to renewables.

The transition to clean energy offers India a massive economic opportunity. The overall investment required to meet the country’s target of 500GW capacity by 2030 has been estimated to be 20-22 trillion. Additional investment of around 12-15 trillion may be needed by 2030 to augment the transmission network and storage capacity. As per a recently released FICCI-EY report titled Accelerating India’s Clean Energy Transition, about 103GW of utility-scale and 11GW of distributed renewable power generation projects are in the pipeline and these would need approximately 4 trillion of capital investment with the potential to avoid 4,350 metric tonnes of CO2 emissions over their lifetime and create around a million job opportunities.

With India’s 2030 and 2070 targets in place, the energy sector continues to witness immense optimism; however, challenges still exist. Issues such as the financial health of power discoms, a delay in enactment of the Electricity Amendment Bill, land acquisition issues, regulatory uncertainties and non-alignment between central and state policies still plague the sector. Another concern relates to scaling and integrating a large share of intermittent renewable energy in the national grid without compromising its resilience and reliability.

Supply side options such as hybrid power plants, gas-based plants, hydro and battery storage will be important to balance the grid and meet inorganic increases in energy demand. Changing supply and demand patterns will also necessitate market restructuring. To this end, a robust transmission network to match the generation capacity with more private sector participation and proper planning will be critical. Initiatives like ‘One Sun, One World, One Grid’ (OSOWOG) will be instrumental. Financing and workforce re-skilling in areas such as Artificial Intelligence and big data, and addressing social concerns for just transition would be critical for it to proceed smoothly.

In the fight against climate change, businesses have a pivotal role to play with their actions, resources and innovation. It welcome that corporates these days are assigning a lot of importance to sustainability, thanks to a growing customer and investor focus on Environment, Sustainability and Governance (ESG) issues, coupled with regulatory and disclosure requirements. Indeed, a growing number of companies have announced their net-zero ambitions and formulated transition plans. Hindustan Unilever, for example, has announced a net zero target of 2039. Our focus on environmental sustainability has demonstrated that such a strategy contributes to the long-term financial success and growth of the company as well as the industry.

India’s transition journey is underway, and given the country’s size, it would be transformational for the whole world. This transition will be driven by advanced sustainable technologies, innovative business models and reforms in our policies as well as markets.

Sanjiv Mehta is president, Federation of Indian Chambers of Commerce & Industry, and CEO and managing director, Hindustan Unilever Ltd

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Published: 11 Jul 2022, 10:38 PM IST
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