by Carol M. Browner, via the Albright Stonebridge Group India Newsletter
In the energy and environment sector, India currently faces a clear inflection point with the potential to become an innovative leader in the use and development of clean energy and renewable products.
While the scale of the energy and environmental challenges is tremendous, it also represents a significant opportunity. The Government of India has also made investment in these areas a key focus and priority, though the country still suffers from shortages of electricity, inadequate water and sanitation, and overburdened infrastructure.
The Indian economy has grown rapidly over the past decade, with growth rates routinely topping 8%, and this year growth is expected to be robust again. Such growth rates are essential in India, where more than half a million new people enter the labor force each month. That being said, the Government of India recognizes that economic growth will falter unless there is more investment in energy, mobility, and water services to provide the critical underpinnings of development. To help meet this challenge, the government is planning to invest over $1 trillion in infrastructure projects over the next five years, half of that in the form of public-private partnerships. This represents a tremendous opportunity for U.S. firms with technological solutions to energy and environmental challenges to develop their presence in the Indian market.
Clean energy is one of the brightest opportunities in India. In 2011, India had the fastest growth rate in clean energy investment of any major economy: $10.3 billion was invested in the sector, a 52% increase over 2010. Under its “National Solar Mission” the Indian government has established a formal goal of 20,000 MW of electricity from solar by 2020. According to Bloomberg New Energy Finance, 2011 saw a substantial increase in grid-connected solar capacity in India, up from 18 MW in 2010 to an estimated 277 MW by end of 2011. The total installed capacity took another giant leap forward last week with the commissioning of the world’s largest PV power plant (600 MW) in the state of Gujarat. With projects like that, it is no wonder that credible sources are forecasting the country may overshoot its 2020 goal. The key to unleashing a true flood of solar investment will be when the price of solar power falls to parity with traditional grid power, a milestone India appears on track to reach as soon as 2018 (indeed, in rural areas, the equivalent of grid parity has already arrived, with solar today providing power more cheaply than diesel fuel).
The Indian wind sector is another success story that continues to build; it added a record 2,827 MW of capacity in 2011, bringing total wind capacity to just over 16,000 MW. This put India just behind China and the U.S. in terms of new capacity additions, and India is on track to add even more this year. A 2011 study by the Global Wind Energy Council forecast that India’s wind energy capacity could increase to more than 65 GW by 2020 if supported by aggressive policies. Perhaps the most exciting recent news for the Indian wind sector is a study released last month by Lawrence Berkeley National Laboratory in the U.S., which pegged India’s wind energy potential at 2 to 3 million MW, which is 20 to 30 times greater than previous official estimates. Much of the increase is due to the fact that modern turbines are taller, and therefore able to take advantage of faster wind speeds at higher altitudes. This vast potential, coupled with prices for wind power that are now cost competitive with imported coal and natural gas, bode well for continued rapid growth in the sector.
And solar and wind are just two of the energy and environmental sectors in the midst of exciting growth.
There is also activity in energy transmission, storage, smart grid, and efficiency. Biomass (wood, agricultural residues, animal dung, etc.), which is still responsible for nearly a quarter of India’s total energy consumption, especially in rural areas, is being given a 21st century spin with the help of gasification technology, which can transform these dirty fuels into clean-burning gas. The gas, in turn, can be used for heat, cooking, or even power generation, even in remote, off-grid locations. In the field of urban mobility, there has been increased focus on electric vehicles, with Mahindra & Mahindra, General Motors, and others introducing all electric city vehicles for 2012. In the area of water provision and wastewater treatment, the Indian market is growing rapidly as well, topping $50 billion per year. As with solar, India has launched a National Water Mission, which has among its goals to increase overall water use efficiency by 20%.
Advocates of U.S.-India trade have been increasingly active in recent years, and there is enormous opportunity for a fruitful partnership between the two nations in the areas of energy and environmental technology. The U.S.-India Business Council and the Confederation of Indian Industry (CII) recently committed themselves to the goal of achieving $500 billion in two–way trade by 2020, up from $100 billion today (and up from just $25 billion in 2006).
The U.S. government recognizes the opportunity for U.S. businesses as well. U.S. Secretary of Commerce John Bryson just recently led a 5-day trade mission to India devoted to infrastructure. Meanwhile, the U.S. Department of Energy has selected three consortia that will make up the $125 million US-India joint Clean Energy Research and Development Center. This project will bring together experts from national labs, universities, and industry in both the U.S. and India, allowing researchers to leverage their expertise and resources in solar technology, advanced biofuels, and building efficiency.
Finally, non-profit and academic circles are also actively engaged in efforts to strengthen clean technology ties between the U.S. and India. Just this week, The Energy and Resources Institute (TERI) and Yale University are hosting the third U.S.-India Energy Partnership Summit in Washington, D.C. This is a gathering of luminaries — including Al Gore, Sen. John Kerry, and Ambassador Nirupama Rao — and advocates, all dedicated to the summit’s theme of “Fostering Innovations for a Sustainable Future.” They are actively exploring ways in which the U.S. and India can cooperate to produce and disseminate clean energy technologies throughout their economies.
The scale of India’s economic development challenges is enough to boggle the mind, but it also represents a unique opportunity for companies with effective solutions to energy and environmental challenges.
This piece was originally published in the Albright Stonebridge Group India Newsletter and was re-printed with permission.Carol M. Browner is a Senior Counselor at ASG and a Distinguished Fellow at the Center for American Progress. Ms. Browner most recently served as Assistant to President Obama and director of the White House Office of Energy and Climate Change Policy. From 1993 through 2001, Ms. Browner served as the Administrator of the Environmental Protection Agency.