From Coal to Control: Securing India's Clean Energy Revolution
By Saiyam Shah
India, and the broader South Asia region as a whole, is faced with the “energy
trilemma,” needing to tackle energy security, energy equity, and environmental sustainability.[1] Rapid stabilization and development of the electric grid has happened over the last two decades, with population access to electricity rising from 60.3% to 99.2% between 2000 and 2022.[2] However, constrained transmission infrastructure and fuel supply shortages have resulted in rolling blackouts. Grid system reliability has also been hindered by market inefficiencies, insufficient energy system investment, and lack of support from financial institutions.[3] In light of global energy price volatility, India’s home and abroad energy policy must reduce risks and address vulnerabilities in India’s current energy model. These viewpoints must also prioritize energy sovereignty and independence by enhancing green energy endeavors. To improve India’s energy resiliency and transition towards a net-zero carbon economy, this security memo suggests the Ministry of New and Renewable Energy (MNRE) and Ministry of Petroleum and Natural Gas (MOP&NG) consider the following three policy recommendations:
Establishment of Strategic Natural Gas Reserves
Enhancement of Capacity-Building Initiatives for the Successful Deployment of Renewable Technologies
Engagement with the Private Sector on the latest AI and Tech Developments Related to Microgrid/VPP Optimization
The New York Times
Background
Figure 1: India's installed generation capacity by source, 2023[3]
As one of the world’s largest economies with a burgeoning energy market, India’s energy security needs are crucial for its citizens and the South Asia region. With a population of 1.4 billion and being the world's third-largest consumer, India's energy demands continue to grow. India’s load generation is largely powered by installed fossil fuel sources, with significant coal and oil reserves. In 2023, coal accounted for 52% of total installed generation capacity. Renewables, such as solar, wind, and hydroelectric, have seen increasing capacity additions, cumulatively contributing 35% of total installed generation capacity. Despite making up just 6% of the nation's energy generation, India aims to increase its natural gas market share to 15% by 2030 as part of its strategy to use cleaner-burning fuels and reduce air pollution.
Figure 2: Evolution of CO2 emissions by fuel in India since 2000[4]
India’s heavy reliance on coal significantly contributes to its global carbon emissions, which are over 2000% higher than those from natural gas.4 The government’s focus is on providing energy that is affordable, accessible, and acceptable to its citizens. Currently, India is working to enhance regulatory frameworks concerning critical energy issues, including robust grid infrastructure, expanding renewable energy capacity, improving energy storage solutions, facilitating the transition to a gas-based economy, and managing global oil price fluctuations. By 2030, the country aims to cut its emission intensity by 45% from 2005 levels and achieve a 50% share of non-fossil fuel sources in its installed capacity, as outlined in its updated Nationally Determined Contributions.[5] Additionally, India has committed to the COP28 global pledge to triple its renewable energy capacity and double energy efficiency by 2030, which is essential for establishing a climate finance framework. The following recommendations are essential for bolstering India's energy sovereignty while promoting decarbonization and transitioning fuel sources.
Policy Recommendation #1: Establishment of Strategic Natural Gas Reserves
India’s import energy import dependency, whether in natural gas or oil, threatens its energy security in light of potentially volatile global markets. In 2022, many long-term contract suppliers of LNG frequently defaulted on cargo deliveries, and many buyers in the South Asia region completely stopped participating in spot markets.[6]
India should seek to establish its own strategic natural gas reserves to mitigate the worst effects of a worldwide energy pricing shakeup. A strategic natural gas reserves system would promote stability in the face of supply chain disruptions and mitigate sudden spikes in demand. These reserves would also instill confidence in the industry that the government can step in and maintain a sense of order within the internal domestic energy system. The reserves can serve as a valuable backup to ensure the smooth integration of renewable sources, being able to step in to meet demand in terms of renewable energy intermittence.
The natural gas reserves, being cleaner than either coal or oil, can help veer off India’s heavy reliance on domestic coal consumption and meet its clean energy transition goals. Its East Asian counterparts, including Japan, Taiwan, South Korea, and China, have already signaled a commitment to building national strategic natural gas reserves. The initial capacity for natural gas reserves in India would be between 3 and 4 bcm of gas.[7]
Policy Recommendation #2: Enhancement of Capacity-Building Initiatives for the Successful Deployment of Renewable Technologies
India would need approximately 293 billion USD in climate finance investment to meet renewable target goals by 2030.[8] International cooperation and renewable energy capacity-building efforts with strategic partners are imperative for effective execution. India would aim to execute this strategy by coalition-building on various climate agenda topics. India’s participation in the G77, a coalition of developing countries and China, could be a strategic arm in building renewable energy capacity and obtaining climate financing from developed countries. India would also exert environmental foreign policy influence through regional collaborations, such as organizing discussions with SAARC (South Asian Association for Regional Cooperation) to explore collaborative approaches to address regional climate challenges. In practice, India’s goal of leading in climate diplomacy would look like proposing joint initiatives with like-minded developing countries on the topics of climate resilient agriculture or climate finance. Initiatives would constitute bilateral or multilateral R&D projects, technology transfer acquisition, comprehensive renewable energy specialization training, and/or policy dialogue for successful renewable energy adoption measures. Taking the first step towards fostering partnerships with global energy players can benefit India’s energy security model and help it stay ahead of the curve in times of geopolitical or financial crises.
Policy Recommendation #3: Engagement with the Private Sector on the latest AI and Tech Developments Related to Microgrid/VPP Optimization
Figure 3: India net renewable capacity additions by technology, 2018-2024[9]
Innovative technology-driven policy is required to address gaps in generation, transmission, and distribution in remote areas of the countries. New energy development necessitates a practical solution that truly balances power supply and demand while alleviating overall pressure on the power infrastructure. An emerging solution that encourages private sector innovation is the implementation of photovoltaic virtual power plants (VPPs). Presently, the photovoltaic sector is a thriving global industry and is expected to experience rapid growth in India.[10] VPPs symbolize the future trend, encompassing energy generation, storage, utilization, and trading. These systems connect all participants and devices within energy generation and consumption scenarios. The objective is to address efficient energy utilization and absorption challenges, resulting in increased economic value. Distributed Renewable Energy (DRE) is outlined as one of the prerogatives of the Indian government’s Ministry of New and Renewable Energy (MNRE).[11] VPPs represent the latest technological development in that space, aiming to tackle energy inequity in marginalized communities while simultaneously boosting reliability in regional energy generation.[12] India should engage with leading innovative firms to utilize the latest technologies in domestic policy incentive frameworks. Investing in public-private technology engagement can help modernize the grid infrastructure while addressing energy security impediments.
Conclusion and Implementation
The standing committee on energy recommends the aforementioned policies to reinforce energy security while keeping sight of decarbonization targets. Establishing natural gas reserves would mitigate price volatility and provide a stable backup to intermittent renewable energy sources. Capacity-building initiatives would help India carefully weave through tense geopolitics and obtain the materials necessary to boost the clean energy transition. Policy engagement with VPP technology would augment grid reliability and resiliency in vulnerable areas of the country. The committee also recognizes that the successful implementation of these policy recommendations must happen through constant and purposeful stakeholder engagement, including private and public actors. Blended finance initiatives can open up private investment opportunities with international finance institutions, debt financiers, and development bankers.
About the Author
Saiyam Shah is a senior at GW studying International Business & International Affairs, with a concentration in International Environmental Studies. Saiyam is passionate about Energy Markets, Grid Resilience, and Global Supply Chains. He’s previously worked at the Federal Energy Regulatory Commission, an independent branch of the U.S. Department of Energy. On campus, he serves as president of Compass, a student-run impact consulting organization that works on 5 projects with clients across 3 continents.