India should be cautious of claims about renewables: Arvind Subramanian

Advises nation to steer clear of the 'coal imperialism' imposed by advanced countries

Raising questions over the current method of costing for renewable energy, the chief economic advisor (CEA) to the government of India, Arvind Subramanian, said bidding is not the true criteria for finding the cost of renewable energy in India. At the same time, he warned against falling into the trap of ‘coal imperialism’ being imposed by developed nations, while urging the nation to continue to invest in coal as the base load till 2030.
 
Speaking at the Darbari Seth Memorial Lecture, Subramanian laid down ten propositions to balance the renewable versus fossil fuel market dynamics. “Coal is both the source of livelihoods for millions and the locus of many communities. But coal is also the source of several development pathologies—corruption, crime, mafias, maoist insurrection—captured in the term the “resource curse”. So, the rise of renewables poses both a threat to those livelihoods and communities, but it may also afford an opportunity to escape from the attendant pathologies,” he said.

 
He said intermittency of renewable energy, land cost, building a grid for it and most importantly the cost of displacing coal needs to be accounted in terms of calculating the costs of renewable energy. “We must be abundantly cautious about claims on behalf of renewables. Properly costed, renewables will achieve true parity (in social terms) with coal only in the future,” he said.
 

He further added that proper estimates of the full costs—not just levelised costs—of renewables are still elusive. “And one thing is clear- recent prices bid at solar auctions in India are not a true reflection of the true cost both because of the plethora of subsidies available and because there has been strategic under-bidding in the reverse auctions as in coal and telecommunications. In fact, there is an important lesson here for renewables, namely, to avoid the experience of thermal power in creating excess capacity,” said the CEA.

 
Terming the two fuel sources- coal and renewables- as ‘Siamese Twins’, he said, “Declining prices of renewables is threatening to upend the thermal power sector, and as prices are renegotiated because power buyers—the discoms—are themselves financially strapped, this threat will extend to renewables themselves. Second, India needs coal in the short-medium term; renewables are part of the energy answer but they also come with hidden costs which must not be overlooked in our headlong embrace of renewable.”
 
India— a country struggling to provide basic electricity to about 25 per cent of the population— carbon imperialism on the part of the advanced countries could spell disaster for the nation, he said.

 
“Under any plausible scenario, coal will provide about 60 per cent of India’s power needs until 2030. It will, and perhaps should, remain the country’s primary energy source because it is the cheapest fuel available. We must shape the national and global narrative and not be stampeded by the rhetoric of carbon imperialism,” he added.