A more sustainable mix: Different shades of green will meet India’s energy needs

India’s growth and prosperity over the next quarter of a century will lead to annual energy usage twice that of today in absolute terms. This is both an opportunity and a challenge from an energy transition perspective and will require one of the largest transformations that the world has seen.

India@2047 is likely to be similar to that of our year of Independence in at least one key way – the majority of our energy sources are likely to be “green”. In 1947, green meant firewood, plant/animal waste, and animal traction, sources which delivered nearly 75% of our energy needs. Only 25% of our energy came from commercial sources, dominated by coal, followed by hydrocarbons and hydroelectricity. Within this, only 3% of commercial energy was delivered by electrons.

In 2047, very different shades of green will meet India’s energy needs. Solar, Wind, Green Hydrogen and derivatives, biofuels and nuclear energy will be the sources of choice. Between a third and half of our energy needs will be met by electrons. However, molecules will still be the dominant part of the energy mix. While coal and oil may be off their peaks, phasing them out is likely to take a few decades more.

The path between now and 2047 will be one of transformation. India’s current energy mix is unsustainable in many ways. Nearly three quarters of our energy sources are fossil in nature, of which more than 40% is import dependent. Both metrics are concerning – India is likely to be one of the most impacted by the extreme effects of global warming across regions, and recent examples of energy weaponization have a worrying effect on energy security. The move towards sustainable energy sources is critical.

The transition from the current state to a greener and more sustainable energy mix in 25 years will need three concerted themes of effort. These are sequenced below, broadly in order of difficulty, but work will need to be done concurrently on all.

The first is to optimize the need for energy. One of the biggest levers to make the energy transition easier is to simply consume less energy per incremental rupee of GDP growth over this period. Manufacturing and the energy industry itself are some of the biggest users of energy– they can contribute most significantly to energy use reduction. Adopting energy efficient technologies, energy recovery systems like WHR, digital and AI/ ML tools to optimize energy use etc. are high RoI efforts which can help reduce energy intensity by nearly 10% over a decade even amongst large efficient players. The impact on inefficient players and MSMEs is likely to be even higher. Similar efforts to optimize consumer energy use in urban areas, as the use of air-conditioners and appliances increases, will also have a significant impact. Optimizing fuel usage in petrol/diesel vehicles is unlikely to deliver significant incremental benefits compared to their electrification.

The second theme of effort is to increase electrification of our economy, and simultaneously green this electricity. Electrification is not only beneficial due to higher inherent efficiency of the technology itself, but far more importantly, it acts as a huge transformation agent to make the switch from fossil fuels to renewable sources. The easiest first step in this journey is to green the incremental electricity needs of the country going forward, as indicated in our national pledges to have 500 GW of RE by 2030. The next critical step will be to switch relevant use cases from fossil fuels to electricity. This will be enabled most visibly in transportation. With the increasing economic viability of Electric Vehicles for personal and commercial use, we could see nearly 40% of new sales for smaller vehicles by the turn of the next decade become electric. Gradual switching of agricultural pumps to solar, tractors to electric, and eventually, even cooking gas to electric will restrict use of fossil fuels. The most difficult of these use cases will be industrial, where converting fossil fuel boilers and furnaces to electric will need technologies and RE costs to come down substantially. The sources of green electricity that will enable this transformation will largely be the same as today, dominated by solar and wind, with contributions by Hydro and Nuclear. Challenges can be expected in finding the required land and other resources to achieve the scales required. Given the concurrent nature of power as a subject, the Central and State governments will need to work closely to address these challenges.The third theme of effort, and possibly the most far-reaching, will be the switch of molecules from fossil to renewable. There are many use cases, e.g. high heat applications, where electrification is too challenging, and the only viable answer would be to find a sustainable fuel molecule. There are many mature and proven technologies to generate Biofuels (incl. biogas) and Green Hydrogen. However, the scale necessary for these options to be meaningfully relevant is still work-in-progress, and the supply chains needed to match the raw material to the generation source and generated product to eventual end-use are still being created. There is high confidence that these technologies will reach the necessary maturity over the next decade with the right pilots and policy support. These molecules will also emerge as the only way to transport renewable energy at transcontinental distances. Fortunately, India has huge potential for these energy sources. For example, it could emerge as one of the most competitive in the world on levelized cost of Hydrogen. For the first time in history, this could enable India to emerge as an energy exporter.

While the solutions above are well-known, they are not all immediately viable. Energy efficiency initiatives, by their nature, and renewable electricity in many situations, are already cost saving by nature. However, this will only cover the first quarter to a third of the energy transition journey. More economic and policy support will be needed to enable electrification of mobility, biofuels, green hydrogen, and products made from captured carbon, which will form a big part of the energy transition. Supply side incentives, like those mentioned in the green hydrogen mission can be part of the answer. However, much more needs to be done, including demand side mandates, and crucially, enablers like carbon pricing and green financing.

India is at a unique position in its energy transition journey. We have been overachieving on our national pledges on sustainable energy adoption and have the ability to continue the same over this decade. However, as we reach the end of this decade, a concerted effort will not just build a sustainable energy future for us but allow India to become a hub for the world.

The writer is Partner, Kearney India.

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