EU-India : Spice route and Solar Route
Europeans waded through seas to set up the spice-route to India. Did they miss Solar Route? Still there is time to explore, invest and trade. Article appeared in special issue of Biz@India on the occasion of 10th anniversary of EU-India Strategic Partnership agreement signed on 8th Nov 2004 at The Hague.
Europeans waded through seas to set up the spice-route to India. That marked the beginning of what is now called as‘ Age of discovery’. Soon after the frenzy of the trade between Europe and Indian continent, the world also discovered the ‘modern economy’ that marked the beginning of Industrial revolution, which brought in ‘age of fossil fuels’. The ‘age of discovery’ that was confined to exploring new trade routes branched and even broke into scientific and technological discoveries. Then came the time when black pepper became less exotic than black gold i.e. coal. Battle to acquire coal, oil and gas became the new game in geo-politics. The imperialism of 16th and 17th century that is characterised by lust for spices, gold, diamonds and exploitation of human resources soon gave place to modern ‘fossil fuel capitalism’.
In this historic fury, the real discovery was totally missed. All those Europeans that tracked spice- routes, missed yet another similar route –a ‘ solar route’. They probably could not have possibly loaded their ships with solar rays, but they definitely missed a vision of utilising the potential of the Sun. The possibility of the cooperation between Indians and Europeans on solar and other renewable energy remained dormant until recently.
Today that world economy, that in the past indicated the signs of modern prosperity, is suffering from grave crisis. EU is facing one of the worst financial crises in its history. The environmental crisis, particularly of climate change, is looming large and it will, as per the experts, deepen EU’s financial crisis further. The series of Intergovernmental Panel on Climate Change (IPCC) fifth assessment reports released over last one year stated that the world faces a threat of food shortages, refugee crises, the flooding of major cities and entire island nations, mass extinction of plants and animals. For India, it is not a futuristic scenario. The disasters like floods and mudslides in Maharashtra, Uttarakhand, Kedarnath, Hurricanes like Hudhud on Eastern coast; erratic and delayed monsoon; rising inflation due to mismatch between food supply and demand are already here. Hot spells like one in 2003 in France, recent water scarcity in Western Europe, melting of glaciers in Alps and increased number of avalanches and floods are menacing crisis rid Europe.
Apart from the historical ties with European countries, both EU and India today face common risks. Europe and India’s dependency on fossil fuels is creating energy and political security risks for both. Continued and indiscriminate use of fossil fuel is also putting both among the top emitters of carbon dioxide emitters. India’s substantial and sustained economic growth is placing enormous demands on its energy resources. Increasing urbanisation and the continuing rapid development of economic prosperity means that consumption of power per capita in India is increasing at a rate, which greatly outstrips supply. The country faces potentially severe energy supply and security issues if it is to continue in its growth as a developing world economy.
Exclusive opportunity amidst crisis
EU and India have exclusive opportunity amidst this crisis. Renewable energy has the power to resolve Europe’s financial crisis and India’s poverty. What more, both can engage in collaborative approaches on policy development and piloting of the projects and learning from each other. The ‘age of discovery’ has re-appeared in 21st century, this time for ‘solar route’, i.e., exploring the renewable energy.
The speed and commitment with which both India and EU are moving forward in achieving targets on renewable energy is a robust evidence that there could be strong coalition of will to turn the crisis into opportunity. In 2007, for example, the EU set a binding target of 20 per cent share of renewable energies in overall EU energy consumption by 2020. It has already reached to 15 per cent of renewable energy share being too close to its set target. India, on the other hand was the first country in the world to set up a ministry of non-conventional energy resources, in early 1980s. It has made accelerated progress and today ranks fifth in terms of the capacity of electricity generation from wind energy.
While addressing the climate change challenges, EU and India can assist businesses as well as science and research organizations in both countries to work together towards generating new business opportunities and technology transfer in the field of renewable energy. Solar Energy is fitting example to illustrate.
Characteristics of solar energy
Utilisation of solar energy can be achieved through two routes: the thermal route that uses the heat for water heating, cooking, drying, water purification, power generation; and the photovoltaic (PV) route that converts the solar energy into electricity for lighting, pumping, communications and power supply in remote areas where grids have not reached or costly to reach. Energy from the sun is sustainable option: abundant pollution free, not controlled and monopolised cartel of ‘fuel suppliers’ and inexhaustible.
Concentrated solar power systems (CSP) include mirrors or lenses to concentrate a large area of sunlight, or solar thermal energy, which is used to produce steam that drive turbines to produce electricity. Solar photovoltaic (SPV) converts sunlight into electricity through a solar cell.
Old continent with new energy: European scenario
As per the report of REN21 network of UN, in the European Union, 2013 marked the sixth consecutive year in which renewables represented the majority of new electricity generating capacity. The 72 per cent share in the new electricity generation year 2013 is in stark contrast to the scenario a decade ago, when conventional fossil generation accounted for 80 per cent of new capacity in the EU-27 plus Norway and Switzerland.
Renewables are achieving high levels of penetration in several countries. For example, in Italy, solar PV met 7.8 per cent of total annual electricity demand. Growing numbers of cities, states, and regions seek to transition of 100 per cent renewable energy in either individual sectors or economy-wide. For example, Scotland aims to derive 100 per cent of their electricity from renewable sources by 2020. Among those who have already achieved their goals are about 20 million Germans who live in the so-called 100 per cent renewable energy regions.
REN21 further states that Europe continued to operate more solar PV capacity than any other region, with more than 80 GW total by the end of 2013. Behind these numbers, the policies on renewable energy designed and implemented by countries in EU over last few years are significant. They constitute some of the best examples of how energy-transformation can be incentivised and catalysed.
Lessons learnt from implementation of these policies would be of great value to India. For example, EU’s 10.4 GW solar capacity added in 2013, i.e., less than half the 2011 amount was mainly due to reductions in policy support and retroactive taxes in some countries that have hurt investor confidence. Yet solar PV’s share of generation continues to rise and prices of PV continue to fall. Similarly, Germany remained the largest EU market, but fell from first to fourth globally, adding in 2013, 3.3 GW after three years averaging around 7.6 GW. The United Kingdom, adding at least 1.5 GW, emerged as the region’s strongest market for large-scale projects, with subsidies attracting institutional investors and developers from across the EU.Other top EU markets included Italy (1.5 GW), Romania (1.1 GW), and Greece (1 GW). Italy’s market was down dramatically relative to the previous two years, and significant market reductions were seen in Belgium, Denmark and France, mainly due to retreat of incentives, that could not have continued forever anyhow.
Such dynamics of incentives and market reactions is the real life example for countries like India that can take lessons when it embarks on higher targets of solar energy.
Sunny side up: Indian scenario
India’s substantial and sustained economic growth is placing enormous demands on its energy resources. Increasing urbanisation and the continuing rapid development of economic prosperity means that consumption of power per capita in India is increasing at a rate, which greatly outstrips supply. The country will face severe energy supply issues if it is to continue in its growth as a developing world economy.
Renewable Energy’s share, excluding hydropower, in India in generating its electricity is just 10 percent. However, a potential for use of only solar energy is huge. For example, 35,000 Square Kilometre of Thar desert in India has dormant potential of nearly 2100 GW.
Though India has set target of 20 GW of solar energy capacity by 2022. The report, published by Bridge to India in association with Tata Power Solar, states that India has the practical and realisable potential to install 145 GW of solar power capacity across various project sizes by 2024.
India needs the additional electricity capacity urgently; to feed its growth plans, to meet the aspirations of its emerging middle class and to eliminate poverty. Solar energy apart from other renewable energy sources can meet this need. Short gestation period, the time needed to install and commission, of solar energy generation systems is convenient for meeting urgent needs and also less costly as compared to thermal or nuclear plants. Conducive energy policies have made beginning. New government has enthused the spirit of ‘ make in India’ and opened the arms to invite international cooperation. EU and India were never before at such ‘meeting point’.
According to the Indian Ministry of New and Renewable Energy (MNRE) Strategic Plan for 2011-17, as far as grid connected supply including feed-in tariff, from both solar PV and solar thermal technologies are in the developmental stage, the real progress will take place only after technologies have been further established and costs have been substantially reduced. This provides the starting opportunity for EU that has long and extensive experience in grid connected feed-in tariff mechanism from technology and policy angles.
India added 1.4 GW of solar PV capacity in 2013 to bring its total solar electricity capacity to 2.6 GW. It also added 0.9 GW of thermal solar capacity during 2013 for a year-end total of 5.2 GW. These numbers show significant progress as compared to individual countries in EU.
Solar-Route leading to Sustainable Development
India suffers from its slow growth, financial and trade deficit due to drain on its fossil fuel imports that are now reaching, to nearly 70 percent of total imports. Impacts of Climate Change are threats to very existence of the ecosystems in India and EU.
China, the US, Europe and India are the four largest polluters and the biggest consumers of fossil fuel. The global trends in renewable energy are very encouraging in the backdrop of this gloomy situation. (SEE BOX 1)
With over a billion people, India is already world’s sixth largest energy consumer. In order to meet its economic and social development goals, the Government of India aims to sustain an economic growth rate of 8 per cent per annum for the next 25 years. To deliver this growth, it is estimated that India’s energy supply will need to at least double by 2020, and increase by three to four times by 2031-32.
Moving to a low-carbon economy can help India to maximize its financial capacity to meet economic and development goals that will also result into a saving of USD 600 billion for more productive investments, says recent report by Climate Policy Institute. Similarly the EU, which is also a net consumer of oil can lead to a net benefit to the financial system of over USD 1 trillion by adopting no-fossil fuel based technologies.
India is now a land of opportunity for European investors in renewable energy technologies. European investors would gain from India’s skilled manpower and ability to produce ultra modern products with low cost, as proven by the recent success of mission to Mars. Manufacturing of super-efficient low-cost solar photovoltaic cells/modules through joint ventures, technology development through collaborative R&D centers to enhance the efficiencies of the systems, joint mechanisms to standardise the products and services, manufacture and export of small and medium sized solar PV power packs and above all evidence based mutually supportive policy development are the area of EU-India solar energy launch. (See BOX 2)
Global trends and renewable energy (BOX 1)
- Renewable electricity capacity achieves new record level, increasing more than 8 per cent in 2013, accounting for more than 56 per cent of net additions to global power capacity; renewables meet almost one-fifth of world final energy consumption.
- The number of emerging economy nations with policies in place to support the expansion of renewable energy has surged more than six-fold in just eight years, from 15 developing countries in 2005 to 95 early this year.
- Those 95 developing nations today make up the vast majority of the 144 countries with renewable energy support policies and targets in place, says REN21’s Renewables 2014 Global Status Report. And the rise of developing world support contrasts with declining support and renewables policy uncertainty and even retroactive support reductions in some European countries and the United States.
- For the first time, more solar PV than wind power capacity was added worldwide accounting for about one-third of renewable power capacity added during the year.
- Even as global investment in solar PV declined nearly 22 per cent relative to 2012, new capacity installations increased by more than 32 per cent. The solar PV market had a record year, adding more than 39 GW in 2013 for a total of approximately 139 GW. China saw spectacular growth, accounting for nearly one third of global capacity added, followed by Japan and the United States.
- China’s new renewable power capacity IN 2013 surpassed new fossil fuel and nuclear capacity for the first time.
- Globally, an estimated 6.5 million peopleworked directly or indirectly in the renewable energy sector, based on a wide range of studies primarily from the period 2012 to 2013.
- In the United States, employment in the solar energy sector has been rising rapidly, mostly in solar PV project development and installation.
EU-India Cooperation on Renewable Energy (BOX 2)
Recently, as a part of the EU-India Cooperation on Renewable Energy, the EU has signed a contract for EUR 8 million. For setting up a 3 MW solar thermal and biomass hybrid power plant in Bihar in close association with the central and state governments.
- The project, titled SCOPE BIG (Scalable CSP Optimised Power Plant Engineered with Biomass Integrated Gasification) will be set up in Dehri, in Rohtas district. Although designated ‘backward’, this area has the potential to grow due to abundant water supply and fertile soil but a shortfall in energy.
- The project will be implemented over five years by a consortium of Indian and EU organisations. The consortium is headed by Centre for Study of Science, Technology and Policy (CSTEP), Bangalore and their partners include: Thermax Limited-private sector, Bihar State Power Generation Company Limited (BSPGCL),
- Detailed geospatial mapping to estimate biomass and solar potential will be done for several states including Bihar, Kerala and Maharashtra.
- An interesting feature of this project will be that chambers of commerce will coordinate industry participation in power equipment whereas local bodies in the project area will be encouraged to participate in selling biomass for the gasifier to ensure its availability.
(Author is the Chairman at TERRE Policy Centre and Former Director, UNEP)