Prime Minister Narendra Modi is trying to parlay a promised doubling of India’s renewable energy target into international support for membership in the Nuclear Suppliers’ Group.
At the United Nations Climate Action Summit last week Modi announced – without mentioning a time frame– that he was increasing the non-fossil-fuel target to 450 gigawatts. Soon after his UN speech, though, Modi spoke at the Bloomberg Global Business meeting and underlined that India, having a coal reserve that is third-largest in the world, cannot ignore that resource as it faces rising power demands.
While the latter remarks made his commitment to tackle climate change appear questionable, since coal is the most polluting fossil fuel, Modi offered a way out of the evident contradiction by hinting broadly that other countries involved should cut India some slack on nuclear energy. The pitch: his country cannot cut down its high coal use because it isn’t permitted to produce nuclear energy.
“One challenge that is before us today is that of nuclear energy, because, since we are not a member of the NSG, we do not really have the ability to get the fuel for producing nuclear energy,” Modi said.
Ever since India applied for the membership in the NSG in May 2016, China has been insisting that only those countries that have signed the Non-Proliferation Treaty (NPT) should be allowed to enter the organization. India describes the treaty as flawed and hasn’t signed it.
India has argued that the NPT created a club of “nuclear haves” and a larger group of “nuclear have-nots.” Then-External Affairs Minister Pranab Mukherjee said in 2007: “If India did not sign the NPT, it is not because of its lack of commitment for non-proliferation, but because we consider NPT as a flawed treaty and it did not recognize the need for universal, non-discriminatory verification and treatment.”
Renewables slowdown
Modi’s 450GW target announced in New York shocked many back home as the renewable energy sector is facing a slowdown and existing targets appear to be behind schedule.
Nonetheless, taking its lead from the prime minister’s announcement, the government has already started drafting plans to set up mega capacities and ease investment in renewables to meet the new target.
The worrying slump in the renewable sector affects especially solar power, which contributes the major part. India had already set a target of reaching 175-GW renewable energy by 2022. By June this year, the country was not even halfway there. Renewable energy minister RK Singh said in June that only 80GW of renewable energy had been established while another 24GW was under installation.
The ambitious target includes 100 GW from solar power itself. Ironically, China is leading the world in terms of setting up renewable energy sources. China supplies 85% of India’s booming solar module demand.
In such a scenario, the Modi government’s shifting goalposts for renewable’s targets are not garnering much confidence, especially since the time period for the 450 GW target has yet to be determined.
Solar game
Increasing solar power has been a major push by the government as it is central both to its renewable targets and to meeting commitments to the Paris Climate Accord. The country has a pledged target to cut the intensity of its carbon emissions by more than one third and boost renewable energy capacity to 40% by 2030.
Currently, at 360 GW, India is the world’s third-largest producer and consumer of electricity. Thus, renewable can play a vital part in cutting emissions through the power sector. But thermal plants still account for around 63% of electricity production.
The recently booming solar sector is also facing headwind due to many factors, making the possibility of completing Modi’s ambitious targets appear shaky.
Central and state agencies have together scrapped solar tenders of close to 7,000 MW in the past year as state authorities haggle to reduce the cost.
Installations in the Indian solar market dropped by 49% year-on-year to 1,737 MW in the first quarter of the current financial year compared with 3,377 MW added in the same period last year. This happened because of a range of factors such as cancellation of auctioned projects, payment delays by power distribution companies to power generators and delay in project approvals during general elections.
By March 2022, the government said, India would have 100 GW of solar capacity. In 2017, The government said there would be 40 GW capacity in solar parks by March 2020, twice as high as its earlier target, making solar parks central to the total solar capacity target. The deadline was extended to 2022 after requests from the industry.
However, the administration still remains far from the target. As per government data, the authorities by late last year had approved 47 solar parks with aggregate capacity of 26.6 GW in 21 states and auctioned only 9.3 Gw. With the current level of progress, the capacity of these solar parks would need to be increased by almost sevenfold to meet the actual target.
The solar parks, being land-intensive, have also run into land acquisition issues, often affecting agrarian communities. Additionally, there are tax issues afflicted on the industry.
On July 30 2018, the Government of India imposed a safeguard duty on imported solar cells from China and Malaysia for two years to boost domestic production. The import duty was pegged at 25% for the first 12 months, at 20% for the next six months and 15% for the rest of the period. It backfired as reports suggest that developers are likely to hold back the purchase of solar modules until 2020 due to the steep duty levied.
Solar projects have been facing land crunch and grid connectivity problems as power distributing companies, known as discoms, falter in management. The companies, at the heart of India’s electricity policies, are also under financial stress. This has resulted in payment delays for power generators, cancellation of auctions, and lack of enforcement of contracts. The outstanding balance owed by distribution discoms to power generating companies rose by more than 57% to 737 billion rupees in July 2019 compared with the same month last year.
Notably, the newly elected Andhra Pradesh government headed by YS Jaganmohan Reddy abruptly proposed renegotiating power tariffs on solar and wind contracts signed by his predecessor, due to fund crunch. Amid mounting dues to power generators, the state’s discoms have asked for a halving of tariffs to Rs 2.44 per unit. The Andhra Pradesh High Court, approached by renewable energy companies regarding the matter, has ruled that the state regulator will have the final word.
Coal will stay
Despite Modi’s big promises to go green, coal is here to stay.
The day after Modi’s UN speech, Coal Minister Pralhad Joshi announced that India plans to sharply increase coal production from the current 730 million tonnes to 1.15 billion tonnes by 2023. Last month the government announced it would welcome 100% foreign direct investment in coal mining. Joshi said, “Despite the push for renewable energy, the country will require baseload capacity of coal-based generation for stability.”
The power sector is the largest consumer of coal in India at 64%. India was the world’s second largest producer of coal in 2017, the latest year for which data is available, according to the International Energy Agency (IEA). Coal consumption in the country has also steadily increased in the last five years.
Even though renewable energy capacity is increasing at a higher rate than fossil fuels, renewables make up only 18.7% of India’s energy.
Modi’s line on use of coal, which is the dirtiest and contributes the most to greenhouse gas emission among fossil fuels, was a tactical plank for his pitch to include India in the NSG.
The government wishes to increase nuclear power capacity significantly even though previous projects have seen large scale agitations from local communities and anti-nuclear activists. India’s largest nuclear power plant, in Kudankulam, faced years-long protests. Some industry reports also show that nuclear power is “too expensive, too slow” to reverse carbon emissions.
Modi said India will focus on “environment-friendly coal mining.” While this still does not placate environmental concerns, coal-fired energy cannot be done away with soon due to the large demand. There’s still a long way to go before renewable energy can fill the gap.