Energy Transition #4 : India Electrified
Part 4 of the Energy Transition series: India Overview
The Guiding Principle
India was the chair of the G20 last year. One thing that makes India stand out from other G20 presidencies is the theme: “Vasudhaiva Kutumbakam” drawn from the ancient Sanskrit text of the Maha Upanishad.
Translated as “One Earth One Family One Future”, the theme echoed the Indian values of sustainability and cooperation.
Energy Transformation in India: The Case for Renewable India
Energy transitions are not easy, they require massive capital expenditure: renewable energy investments are front-loaded, however (1) There are minuscule operating costs (2) The technologies are getting cheaper so the replacement cost decreases.
What made mankind switch from cow dung and wood to oil - Our energy needs would not have been satiated with the older means
To draw a parallel, our energy needs of the future - computing would not be satiated with fossils - we need to harness renewables.India has one of the lowest cost of renewable energy in the world….
Despite not having an integrated manufacturing base, India’s renewable cost is over 25% lower than China's:
So invest in renewables and build energy Infra….
With this as an enabling factor different estimates point towards huge investments in the sector eg. Goldman Sachs report projects investment of US$ 1.7 Trillion towards energy transition capex in the next 25 years (including transmission). In the near term, the BCG report estimates investments to the tune of US$40 billion every year till FY2030 (excluding transmission).
Leading to a significant share of renewables in the total installed capacity….
Generation is one side of the equation and has to be balanced with Transmission & Distribution (T&D) Infrastructure
To deep dive into transmission & Distribution, check out my previous post.
Recap: (1) T&D Infra takes longer to build and hence needs to be built proactively (2) The Age of Renewables requires a more resilient grid to cope with renewable intermittency, variability, and seasonality.
India has in the past built Transmission Infra proactively
A case in point is the growth in Transmission in the country and initiatives like Green Energy Corridors.
Looking globally also India has fared well in adding transmission infra over the last decade. Where the developed world has not been very active, China (extremely aggressive), Brazil, and India have upped the game.
India has a stated target of 500 GW of renewables by 2030. So accelerated investments are required.Side Note: Overbuilding of the grid in the past after the July 2012 Blackout
The Grid collapse in Jul’12 led to a National Blackout effectively triggering material capex on the grid. The quantum of this capex is exemplified by the fact that Power Grid’s (PGCIL) asset base increased 4x. Although it appeared that the capex cycle would suffice India’s grid requirements, this instance led to the absorption of a sharp rise in Solar.
National Electricity Plan
The following table outlines the transmission plan of the country till March 2027.
An Important highlight of the plan is increasing investments in high voltage infra. This is a strategic step to reduce technical losses which is one of the highest in India and secondly illustrates the increasing grid intensity as the share of renewables in power generation increases.
As per the draft National Electricity Plan (NEP), an investment of 4.75 Lakh Crore is envisioned during the period 2022-27.
To Sum Up
The renewable opportunity in India is enormous. The tilt towards renewables serves strategic interests of energy self-reliance and economic interests arising due to cheaper unit cost economics amid increasing demand as the country moves towards continued GDP Growth.Dig further into this theme:
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Well covered!!
Good