Decentralized, clean energy has the potential to contribute 10-15 per cent of India’s energy supply, providing easier access to energy to those deprived of it, and also contributing to poverty reduction by laying the foundation for rural growth
India consumed 421 million tonnes of oil equivalent in 2015, 57% thermal energy and 43% electricity. Decentralized, clean energy has the potential to contribute 10-15% of that, providing easier energy access to those deprived of it, and contributing to poverty reduction by laying a foundation for rural growth.
Cooking and water heating
About 160 million rural households cook every day, with 20% connected to LPG thanks to the Ujjwala scheme, which has also seen a significant decrease in kerosene use. However, 80% of rural households burn biomass in inefficient traditional cookstoves, accounting for the use of about 450 million tonnes of biomass such as firewood, agriculture residue, and dung cake.
Even if LPG is promoted as expected, traditional biomass stoves will continue to be kept as one household option, so making them more energy efficient is important.
Two distinct opportunities emerge here: (1) harnessing untapped potential for biogas plants as an option for cooking fuel, and (2) until LPG fully penetrates rural India, replacing existing biomass stoves with energy-efficient, smokeless stoves, which can reduce biomass consumption to less than half. The investment potential in biogas plants is about 3.4 billion dollars, while in improved cookstoves, it is up to$2 billion. In the longer term, innovation int solar and solar induction cookers, and solar dishes for community kitchens can be useful interventions.
Meanwhile, solar water heaters could mean an investment of about $29 billion by 2032 if used to replace biomass in rural areas and electric geysers in urban areas.
In addition, India has a large number of industries that require medium-to-high thermal energy for heating fluids, generation of hot air, etc. At present, India leads in the use of solar concentrators for heat applications, with the market share increasing by five times in 2017 from 2011. A very conservative estimate pegs this market at $415 million by 2032.
Lighting, agriculture and enterprise
As of March 2018, India has a total installed power capacity of 333 GW, of which 62.5 GW comes from renewables. The estimated solar energy potential of the country is 748 GW, and the government has set a target of 100 GW by 2022, and so far achieved 17 GW by end of 2017.
According to one estimate, there are nearly 180 million kerosene lamps and lanterns, while fewer than 10 million solar lamps and lanterns are in use. If kerosene is replaced by solar lamps/lanterns, the required investment is about $5.3 billion. In this case, however, new investments could be avoided through financial re-engineering by replacing kerosene subsidy.
Another big opportunity is street lighting in villages, towns, and cities. Until now only half a million street lights have been installed, totaling 10 MW. It is estimated that nearly 3.5 GW equivalent streetlights can be solarized, and the estimated investment potential is $15 billion.
India uses 30 million (21 million electric and 9 million diesel) pump-sets in the agriculture sector. Over 20% of all electricity in India is consumed by these pump-sets, which is highly subsidized and ripe for disruption by solar. Only about 150,000 solar pumps are in the field today. The Government of India has initiated the KUSUM scheme, which aims to install over 2.75 million solar pump-sets with an outlay of nearly $16.2 billion. Another estimate suggests the investment potential could be about $40 billion in the medium term. In the long term, theoretically, solar pumps can replace most existing pump-sets.
Similar to kerosene lighting, replacing conventional electricity agriculture pumps with solar could be carried out through financial re-engineering with negligible additional investments by the government. Nine million of them are diesel pumps with 30 GW of installed capacity. Conversion to solar will have a much higher pay back in the long term.
It is also estimated that of India’s more than 60 million enterprises, at least one million have potential to use distributed renewable energy, which would be worth $2 billion. In addition, India has nearly half a million telecom towers and over 50,000 petrol pumps, where some initial progress has been made in installing solar. But much more is possible — up to 3.5 GW requiring $12.5 billion.
Lastly, only about 5.2 GW of the total potential of 21.13 GW of small hydro (mini, micro, and pico plants) has been installed in India, so three-fourths of the potential is yet untapped. Mini, micro, and pico hydro systems hold an estimated potential of 5 GW, worth an investment of about $5 billion.
Conservatively, the total investment potential for decentralized renewables is $115.3 billion. If we add solar rooftop’s potential of 40 GW, the overall investment potential could swell by another $40 billion.
Some Government of India schemes offer additional, large and immediate opportunities for the distributed renewables industry. For example, PMAY-G aims to build 10 million houses. Each of these houses can install about 2 kW of solar panels, which can generate nearly 2000 kWh of electricity annually. One-third of it would be sufficient to meet household needs, while the rest could be sold to a DISCOM, which could fetch about Rs 10,000 annually to each household. Thereby all houses, and the electricity they generate in a year, together sum up to 20 GW. The investment potential here would be about $20 billion.
Other opportunities exist on the innovation front. Lithium-ion batteries and super-efficient solar panels (30% efficiency vis-à-vis the present 21% or less) can redefine the use of solar rooftops. Similarly, solarizing energy-efficient appliances, water pumping mills, aero generators, and hybrid systems have reasonable potential with niche applications.
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