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Emerging Market for Renewables

  • 16 Jul 2021
  • 6 min read

Why in News

According to a recent report, fossil fuel electricity generation has peaked worldwide as emerging markets seize the opportunities of low-cost renewables.

  • The Report was published by India’s Council on Energy, Environment and Water (CEEW) and the financial think tank Carbon Tracker (both are not-for-profit organisations).

Key Points

  • Findings:
    • Emerging Market are Key to Global energy Transition:
      • Emerging markets are key to the global energy transition, accounting for 88% of all expected growth in electricity demand from 2019-2040.
        • Overall, 82% of current emerging market electricity demand and 86% of expected demand growth comes from countries that import coal and gas, and they have powerful incentives to switch to solar and wind.
        • With the right policies in place, technology and cost barriers to change can be crossed.
        • The transition is different in emerging markets because they have electricity demand growth from a lower base as well as the need to provide access to hundreds of millions of people.
      • In developed markets, demand for fossil fuels for electricity generation has fallen by 20% since it peaked in 2007.
    • Four Key Groups of Emerging Markets:
      • China, which is nearly half the electricity demand, and 39% of the expected growth.
      • Other importers of coal and gas such as India or Vietnam, which are a third of the demand and nearly half the growth.
      • Coal and gas exporters such as Russia or Indonesia, which are 16% of demand but only around 10% of the growth.
        • Resistance to the energy transition is likely to be more entrenched in coal and gas exporting countries.
      • ‘Fragile’ states such as Nigeria or Iraq which are 3% of demand and around the same share of growth.
    • India has set an Example:
      • India, which accounts for 9% of emerging market electricity demand and 20% of expected demand growth, illustrates the speed and scale of change.
      • From less than 20GW of solar in 2010, it has grown to 96GW of solar, wind biomass and small hydro in May 2021.
      • Including large hydropower, renewables now provide 142GW or 37% of the country’s power capacity, and it has a target of 450GW by 2030.
      • Demand for fossil fuel generation reached a plateau in 2018, and fell in 2019 and 2020.
      • While fossil fuel demand might again increase in the near-term to meet latent electricity demand, India has demonstrated how a double leapfrog - connecting nearly all households to electricity and its renewable energy rollout - can be driven with policy priorities and market design.
  • Suggestions:
    • A supportive policy environment is the key to driving growth in renewables.
    • If countries liberalise markets and introduce competitive auctions, they can cut costs and attract international finance as capital markets turn their backs on fossil fuels.
      • Auctions have helped India drive the cost of solar down to one of the world’s lowest levels.
    • Developed countries can speed up the transition to renewables in emerging markets by providing policy support, technology expertise and by using development finance to reduce the cost of capital.

Indian Initiatives for Renewable Energy

  • Hydrogen Energy Mission: The Union Budget for 2021-22 has announced a National Hydrogen Energy Mission (NHM) that will draw up a road map for using hydrogen as an energy source.
    • The initiative has the potential of transforming transportation.
  • Jawaharlal Nehru National Solar Mission (JNNSM):
    • It was launched in 2009 with a target for Grid Connected Solar Projects of 20,000 MW by 2022.
    • The sector has witnessed rapid development with installed solar capacity increasing rapidly from 18 MW to about 3800 MW during 2010-15.
  • International Solar Alliance:
    • It was launched by the Prime Minister of India and the President of France on 30th November 2015 in Paris, France on the side-lines of the Conference of the Parties (COP-21), with 121 solar resource rich countries lying fully or partially between the tropic of Cancer and tropic of Capricorn as prospective members.
  • PM- KUSUM:
    • KUSUM stands for Kisan Urja Suraksha evam Utthaan Mahabhiyan.
    • It’s objective is to provide financial and water security to farmers through harnessing solar energy capacities of 25,750 MW by 2022.
  • National Wind-Solar Hybrid Policy:
    • The main objective of the policy is to provide a framework for promotion of large grid connected wind-solar photovoltaic (PV) hybrid systems for optimal and efficient utilization of wind and solar resources, transmission infrastructure and land.
    • The wind-solar PV hybrid systems will help in reducing the variability in renewable power generation and achieving better grid stability.
  • Rooftop Solar Scheme:

Source: IE

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