India: Powering a Sustainable Future

Growth in India

Energy is a major challenge for most developing nations and India is no exception. The Bureau of Energy Efficiency was established to manage the geopolitical convergence of natural resource management, energy production, and political interests. Facing on average 12% annual growth in energy demand, one of the highest in the world, the organization is responsible for crafting a policy that demonstrates to the world India’s commitment to sustainable future.

Current estimates place India’s population just above 1.26 billion, 21-29% of whom live below the poverty line. Within the next decade, India is projected to outpace China economically and in population growth to become the leading developing nation. Economic and social transformation over the past decade has been rapid—driving energy demand. However, the county still faces several fundamental hurdles; notably the poverty crisis, weak infrastructure, corruption, and pollution. As long as overall economic activity continues its upward trend, the demand for energy will follow.

Geopolitics of Sustainability in India

As of 2015, India still relies heavily on coal—accounting for over 50% of its energy source. Struggling to manage rising demand, coal remains the fastest and most affordable option the country has considering current resources, infrastructure, and technological restraints. However, damage caused by non-sustainable practices and resource utilization cost the economy an estimated $80 Billion per year. As growth is expected to accelerate in the coming years, the Indian Renewable Energy Development Agency (IREDA) promotes a sustainable long-term strategy which acts as a counter balance to steep demand.

Sustainability, however, is no longer a regionalized issue; it is a joint global effort. During the two-week COP21 conference in Paris at the end of November, international geopolitical pressures have pushed India to make even stronger commitments to energy reform. Over the past thirty years, inability to satisfy increasing demand has lead to greater dependency on energy imports. However, tense relations with regional suppliers, such as Pakistan, have forced politicians to focus on expanding domestic production capabilities. Although the IREDA has set impressive goals for sustainable energy production, coal remains the cheapest and fastest way to respond to demand.

“We cannot agree to any proposal that will restrict our ability to generate energy from coal or inhibit our efforts to ensure energy access to all our people in an accelerated manner,” Ajay Mathur, director general of Bureau of Energy Efficiency

India’s Plan

Currently, energy production in India is diversified among the following six sources: Coal, Hydroelectricity, Renewable Energy, Natural Gas, Nuclear, and Oil. Although still coal-dependent, investment in renewable energy sources (i.e. Wind and Solar Power) has been on the rise. Windfarms supply only a small portion of total energy usage, but India currently ranks 5th globally in wind energy production. Solar power is also on the rise, noting a 66% increase in rooftop solar panels in 2015 alone.

Further, in 2008 the Congress party launched the National Action Plan on Climate Change (NAPCC). The plan contains two specific missions addressing energy: (1) National Solar Mission and (2) National Mission for Enhanced Energy Efficiency. The Solar Mission outlines India’s plan to increase photovoltaics (Solar Energy) output to 1000 MW annually, at which point it will become price competitive with other energy sources. The Energy Efficiency mission sets in place a set of policies to reduce energy consumption through sustainable building and consumption restriction. These both tie into the NAPCC’s overall mission, to ensure India’s rapid growth is sustainable.

By the end of 2015, total investment in sustainable energy will surpass $10 Billion with further investment planned by SunEdison and Andani Group. By 2025, the total investment could double. The push towards sustainability brings about a host of advantages and disadvantages. After careful analysis it is clear that the benefits outweigh the costs. For example, between 2011 and 2014, Clean Energy added 24,000 jobs to the economy allowing India to address three critical issues: Energy Production, Unemployment, and Infrastructure simultaneously. The number of jobs will continue to rise along with investment—one sign that clean energy is essential in advancing the economy, protecting the environment, and building a stronger, more competitive, India.

*Written for the Crack 40, BIG--Finance Association at Grenoble Ecole de Management