India has made exceptional and inspiring strides towards renewable energy growth, focusing on solar Power. However, the country is still one of the largest (3rd) oil consumers in the world, consuming 4.69/million barrels per day, having a 4.8% share of the world’s total oil consumption. It is expected that China and India will account for nearly 50% global oil demand in coming years. And more surprisingly, predictions suggest that demand in China will start to slow within 2023, while in India it will pick up in the preceding years. This can become a great concern for a country that is supporting green energy transition. Especially if we factor in the growing crude oil prices that are climbing up year after year, urging fossil fuel run society to desperately find a more sustainable energy source.
Fall in crude oil prices as witnessed from FY 12-13 to FY 15-16 allowed both developed and developing countries to import huge volume of crude oil. However, steep increase in current oil prices due to reserves nearing depletion and oil producing countries limiting production/export (Saudi Arabia announced to export 7.2 million barrels per day in January 2019, down from 8 million exported in November 2018) have put countries into a bind. However, also given continuous and clear message regarding the importance of opting for green and sustainable energy solutions. Crude oil prices have increased from $39.9/per barrel in April 2016 to $61-$65/per barrel in January 2019. India, imports nearly 80% of its oil needs, and the country spent $ 87.7 billion (Rs 5.65 lakh crore) on importing 220.43 million tonne (MT) of crude oil in 2017-18. For 2018-19, the imports are expected to reach 227 MT, costing nearly $125 billion.
This clearly identifies a huge import expense and continuously falling rupee will also aid in higher forex outflow from India, which could have been used in renewable energy growth investment in India, bringing overall progress. It is agreeable that solar energy in India is still at a nascent stage and it is still not capable enough to replace fossil fuel completely. In the year 2018, India added 6.6 GW solar power capacity, with large scale projects contributing 5.3 GW and rooftop solar adding 1.2 GW. This new capacity addition has made solar account for nearly 53% of new energy capacity additions in India and helped India reach ~24 GW grid connected installed solar energy capacity. However, it is still only 7% of the total energy capacity.
Current energy demand in India is ~172 GW, and although India’s total installed energy capacity is 347 GW, and the country is spending billions upon billions in oil, there is a deficit in energy supply (-1.4%). And factoring in fossil fuel’s limited reserves and rising cost, it is easy to understand that the deficit will only rise. And this invariably indicates that shift to green energy is the right decision for India.
Solar as Saviour
Factoring in Saudi Arabia’s announcement to reduce oil production and supply, it is fair to assume that other top oil producers like- the US will eventually follow the same path. This will continue to increase the oil prices. India’s energy demand has grown at 3.6% pa over the past 30 years, and continue to grow, in this situation, if India continues to depend on oil for energy, it will have ill-effect on country’s economy and limit India’s progress plans in all sectors (even in green energy transition).
When importing oil is turning into an overly expensive endeavour for India, on the other hand, solar power is showing great promise in offering power to all, while saving money in the long run. Understanding benefits of green energy transition, developing countries like- Brazil, South Africa, Chile, Philippines are making huge investments in solar energy adoption.
This is the perfect time for India to focus on green energy investment, championing solar. However, more efforts are needed to support solar, not just solar panels installation but manufacturing is also important. Increasing domestic manufacturing growth (rather than importing solar panels) will also help India to kick back profit from the export market (domestic manufacturing can save $42 billion by 2030 from solar import), generate more jobs (1,017,800 jobs are expected be created within 2022), and initiate socio-economic growth.
Therefore, it is fair to state that the path before India has been cleared by the recent price rise of crude oil. All that remains now is to reduce oil imports and act aggressively towards complete solarisation of the country while focusing on domestic manufacturing for continued profit extraction from global market.