Just a few years ago, the world watched nervously as India went on a building spree of coal-fired power plants, more than doubling its capacity and claiming that more were needed. Coal output, officials said, would almost triple, to 1.5 billion tonnes, by 2020.
India’s plans were cited by American critics of the Paris climate accord as proof of the futility of advanced nations’ trying to limit their carbon output. But now, even as President Donald Trump pulls the United States out of the pact, India has undergone an astonishing turnaround, driven in great part by a steep fall in the cost of solar power.
Experts now say that India not only has no need for any new coal-fired plants for at least a decade, given that existing plants are running below 60% of capacity, but that after that it could rely on renewable sources for all its additional power needs.
Rather than building coal-fired plants, it is now cancelling many in the early planning stages. And last month, the government lowered its annual production target for coal to 600 million tonnes from 660 MT.
The sharp reversal, welcome news to world leaders trying to avert the potentially deadly effects of global warming, is a reflection both of the changing economics of renewable energy and a growing environmental consciousness in a country with some of the worst air pollution in the world.
India does matter because it is the world’s third-largest emitter of greenhouse gases, behind China and the United States. And its energy needs are staggering — nearly one-quarter of its population has no electricity and many others get it only intermittently.
With India’s power needs expected to grow substantially as its economy continues to expand, its energy use will heavily influence the world’s chances of containing the greenhouse gases that scientists believe are driving global warming.
Much attention at the time of the signing of the Paris agreement was focused on the role President Barack Obama played in pushing Prime Minister Narendra Modi, to sign. In doing so, Modi committed India to achieving 40% of its electricity capacity from nonfossil-fuel sources by 2030.
Less understood was Modi’s long-standing personal commitment to taking India in a greener direction. That has been strengthened in recent years by growing evidence that a greener path makes political and economic sense as well, says Harsh Pant, a fellow at the Observer Research Foundation, a New Delhi-based research organisation. “Modi’s constituency is the middle class, and the middle class in Indian cities is choking on pollution,” Pant said. “Modi knows climate change is good politics. Climate change makes sense to Modi because he believes it as it is good economics and politics.”
Two major economic factors lie at the heart of India’s move away from coal. The first is that the country’s growth rate, while faster than that of most major economies, slipped to 6.1% for the most recent quarter, down from 7% in the previous quarter. And much of that growth has come in service industries rather than in power-hungry manufacturing.
Equally important is the startling drop in the price of renewable energy sources. Many energy experts say renewables are poised to become a less expensive alternative to coal within the next decade.
“The train has left the station. Trump has come too late” to slow the transition to renewable energy, said Ajay Mathur, director general of Energy Resources Institute, a New Delhi policy centre closely associated with the government. “By the time the coal-fired plants come up to full capacity because of increasing demand, the price of renewables will be lower than the price of coal.”
Based on December data from the Central Electric Authority, Mathur’s institute reported in March that India might be able to meet its additional power needs in the future with renewable energy.
It based that prediction on the remarkable drop in the cost of solar power. In approving proposals for new solar power plants, the Indian government seeks bids from prospective builders who compete to pledge the lowest price at which they anticipate selling power.
Five years ago, the lowest bid came in at Rs 7 per kilowatt-hour. In early May, the lowest bidder came in at less than half of that price, or Rs 2.44 per kilowatt-hour, experts say. The latest bid makes solar power less expensive than coal, which sells for about Rs 3 per kilowatt-hour.
Storage costs, a critical component of renewable energy systems, have also fallen. “The crucial question has been, ‘Yes, but what do you do when the wind doesn’t blow and the sun doesn’t shine?'” said Adair Turner, chairman of the Energy Transitions Commission, which studies climate issues.
The cost of lithium ion batteries, the gold standard in solar power storage, has fallen significantly, Turner said, largely because of economies of scale. Where the price was about $1,000 per kilowatt-hour more than five years ago, it is now $273 and dropping, Mathur said.
Hypocritical West
The price needs to fall to $100 per kilowatt-hour for renewable energy to be comparable in price to coal, Mathur says. Turner thinks that will happen far sooner than the year 2030, which his group had been predicting. “To be blunt, the success of this has been bigger than I certainly realised,” Turner said. “There were people who were optimists, and it’s the optimists who have won out.”
New Delhi had long argued that it was hypocritical of Western nations that have burned fossil fuels for centuries to ask Indians to sacrifice their growth to cope with the effects. But the Modi administration has set ambitious targets for a greener Indian future. The government pledged in 2015, when the country’s electricity capacity from renewables was 36 gigawatts, to increase it to 175 gigawatts by 2022.
Power minister Piyush Goyal announced in a speech in late April that the country would take steps to assure that by 2030 only electric cars would be sold. “That’s rather ambitious,” Rahul Tongia, a fellow at Brookings India, said. “The targets are there. The vision is there. The question is: ‘Is it going to happen? How?’”
The government’s policy research arm, the National Institution for Transforming India, or Niti Aayog, recently released a report in collaboration with the Rocky Mountain Institute in Boulder, Colorado, which calculated that India could save $60 billion and reduce its projected carbon emissions by 37% by 2030 if it adopted widespread use of electric vehicles and more public transportation.
Mathur says that even if India falls short of those ambitious goals, just coming close will have a huge impact on the concentration of greenhouse gases in the world and pollution within the country. “Even a year and a half ago, I didn’t expect we would go out on a limb and say electric vehicles are a public policy goal for us. It is truly exciting,” he said in an interview.
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