India's conflicting ambitions

If we want to expand clean energy, why are we expanding the not-so-clean options?

It is an interesting and unique thing about India: For every statement that is true, the exact opposite statement is also true. We want to tax more, and we want to tax-exempt more. We want to clean up, and we also want the right to litter. We want to expand clean energy, and we also want to expand the not-so-clean options.  BloombergNEF wrote some months ago about how the country’s energy policy seems to be framed by a multi-headed hydra, with very conflicting ambitions. The three contradictions that stood out this year were:

Cheap power, or maybe not: The imposition of safeguard duty on the import of solar panels in July did not really have a significant impact on local manufacturers, but directly went against the goal of securing the most cost-competitive power. One of the early decisions of the government of Prime Minister Narendra Modi in 2014 was to drop the proposal to impose anti-dumping duties on solar cell imports as it would have raised costs for solar power. And there was the 100 gigawatts solar target to be met by 2022. Cost competitive power is still in demand, especially from bulk buyers like discoms. There is a case for promoting local manufacturing, but can we really take on China, which dominates this market? A global tender for 3 gigawatts of manufacturing capacity linked to 10 gigawatts of solar projects secured only one bid, and that too after several extensions to the deadline to bid.

Electric vehicles for all, or for some: India almost chose to be one of those countries opting to move towards full-electric mobility, but backtracked on concerns about its impact on the existing automobile industry, among other things. There were also concerns about taking such a decision without investing in charging infrastructure. A proposal for battery swapping stations instead of charging stations was mooted. 

 

Meanwhile, a bulk tender to procure 10,000 electric vehicles was floated by Energy Efficiency Services Ltd.— the same company that had managed to dramatically bring down the cost of LED bulbs via bulk procurements. 

The winning bidders, the Tata Group and the Mahindra Group, are supplying the vehicles, and the charging stations are slowly coming up in select locations. The expectation was that there would be far more electric vehicles and charging stations visible by the end of 2018. That has not happened.

The government now says it will first move for electrification of two-wheelers, three-wheelers and buses, rather than passenger cars, though the bulk tender was for passenger cars. Perhaps the next year will bring some clarity on direction.

As for the Indian Railways, they have adopted a 100 per cent electrification plan to save money, and also decarbonise. 

Clean air, or not: Clean air is ostensibly a priority. The air quality is being tracked real time, and data is on display for the wider public in cities like Delhi. However, thermal power plants that were to abide by stricter norms on particulate matter, SOx and NOx by December 2017 were given until 2022 to comply. Checks on polluting industries are also largely absent, though there are a lot of rules on paper. The National Green Tribunal continues to crack down on violators, but not much has changed on the ground. The skeptics say that the only real action being taken on air quality is in its monitoring. 

The author is editor, global policy 

for Bloomberg NEF

vgombar@bloomberg.net