by Hannah Green
This August, power shortages in India that left 300 million in the dark made it very clear that one of the world’s fastest growing economies was facing an energy crisis. Less clear is how realistically to solve it. Many firms are looking for new sources of oil to fulfill India’s growing energy demands, but this could prove to be painfully expensive. On the brighter side, solar energy and other renewable resources are already being rapidly harnessed in the non-Western world, and they are becoming cheaper and cheaper.
As of June 2012, 31 percent of India’s energy came from renewable resources, including hydroelectric power, while only 9 percent of the United States’ did as of the end of 2011. In a 2009 McKinsey & Company survey, India was rated the top producer of solar energy in the world, just above the United States, with an annual yield of 1,700 to 1,900 kilowatt hours per kilowatt peak (kWh/KWp). However, demand for energy in India will only continue to grow, and the question is whether energy will continue to come mainly from fossil fuels or from renewable energy sources
Many hope so. Current local and imported supplies of gas and coal in India are insufficient to fulfill energy demands, and both investing in sufficient imported fossil fuels to keep India electrified or extracting new natural gas sources will hurt the Indian economy, according to a report by Boston Consulting Group. Hunting for shale gas is a risky and expensive venture, and creating Liquid Natural Gas facilities to ease the transport of imported oil would also require an investment of $12 – $25 billion. However, hydroelectric, wind, and solar power sectors are all growing. Hydroelectric power already accounts for 19 percent of India’s electricity, but at the moment less than half of available hydroelectric resources are being exploited. Several solar power initiatives by state governments and the department of renewable resources are currently at work in India, the largest of which is the Jawarhal Nehru National Solar Mission, launched in 2010. The goal of the $19 billion plan is to harness 20,000 MW of grid power solar energy and 2000 MW of off-the-grid solar energy by 2020.
Part of the reason that solar power is becoming so affordable for India is that the demand for it is decreasing in the West. China’s solar power industry has recently faced an excess manufacturing capacity because of EU cutbacks on solar subsidies. That’s bad news for China, but good news for the Indian solar industry.
A report by the environmental research firm Clean Edge and non-profit Co-op America shows that 10 percent of United States energy could potentially come from solar power by 2025, but only a small fraction of that potential is actually in development. Due to its larger land mass and smaller population, the United States has the potential to create much more solar energy than India does, and its energy demand continues to be much higher than India’s, despite having a quarter of India’s population. However, if current American and Indian government initiatives proceed as planned, the United States will likely continue to remain behind India as a producer of solar energy by 2030.
There are several reasons why renewable energy sources are growing faster in India in the short term than they are in the United States and Europe. India can’t afford to rely on expensive and unreliable fossil fuel imports the way that richer countries with solid infrastructure in place for traditional energy resources can. For rich countries to switch to renewable energy requires a choice: keep the infrastructure that’s in place and continue to use non-renewable energy (cheaper in the short term) or make the comparatively expensive switch to renewable energy. In India, on the other hand, villages that are still off the grid have only to choose the option that is cheaper from the ground up. It is often cheaper to install new solar energy plants than it is to connect to the existing grid in India. Thousands of Indian villages have already been newly electrified with solar power. In some villages that don’t yet have full electricity, small solar cells are a significantly cheaper and safer replacement for kerosene cells. Finally, other concerns, such as aesthetics, continue to impede the construction of renewable energy plants in the United States and Europe. In India such things are given little consideration.
Countries that are making room for renewable energy now may well benefit in the long term. Recently there has been speculation as to whether India can keep up the rapid economic growth that has taken the world by storm in the past few years. It’s true that in the short term growth is slowing down. But long-term factors like energy blackouts, energy access, and global warming might eventually see India moving ahead once again. In coming years, leaders in renewable energy might not be those countries most capable of producing it, but those who can least afford not to.
Hannah Green covers economic and foreign policy issues, especially in South Asia and the Middle East. She recently received her B.A. in history from Northwestern University, and is living Lucknow, India, where she studies Urdu and Hindi.