A sunny alliance to fight climate change
With progress in technology, solar energy is rapidly becoming competitive
More
than 130 heads of states are expected to speak at the 21st session of
the Conference of Parties (COP 21) to the United Nations Framework
Convention on Climate Change (UNFCCC) starting in Paris on 30 November.
On the inaugural day, Prime Minister Narendra Modi and French President
François Hollande are expected to jointly launch an international solar
alliance of more than 100 countries located between the tropics. Mooted
by the prime minister, the alliance aims to bring together countries
endowed with a rich supply of sunlight on a common platform to jointly
pursue the development of solar power through effective sharing of
finance, technology and best practices.
With rapid progress on frontiers of technology and the availability
of capital at low costs, solar has emerged as an attractive source of
energy. A recent tender floated for a solar park in Andhra Pradesh’s
Kurnool district by state-run NTPC received a record low bid of Rs.4.63
per kilowatt-hour by US-based SunEdison Inc. The convergence in tariffs
with other sources of energy is unmistakable. The solar alliance may
further bring down the costs by permitting effective exploitation of
economies of scale and comparative advantages of different countries in
research and development, manufacturing and finance. The gains from such
an alliance will also depend on the design of the institution and how
its objectives are aligned with the national interests of the
participating countries.
The world famous
entrepreneur Peter Diamandis once said, “We live in a world bathed in
5,000 times more energy than we consume as a species in the year, in the
form of solar energy. It’s just not in usable form yet. But there are
amazing breakthroughs there… Technology can help that.”
It is exactly what technology
is doing. According to a study by Bloomberg New Energy Finance (BNEF),
the year 2015 has seen significant enhancement in the competitiveness of
onshore wind and crystalline silicon photovoltaics against coal-fired
and gas-fired electricity generation. The SunEdison’s bid in Andhra
Pradesh is indicative of the same trend in India.
Since coming to power, Modi
has taken a number of steps to ramp up the use of renewable energy and
combat climate change. He stepped up the target for solar energy set by
the previous government five-fold to 100 gigawatts (GW) to be achieved
by 2022. The target for renewable energy is now 175 GW for the same
year. With financial and technological assistance from developed
countries—as stated in its Intended Nationally Determined Contribution
submitted to the UNFCC in the run-up to the Paris climate talks—India
aims to achieve 40% cumulative electric power installed capacity from
non-fossil fuel-based energy resources by 2030. These targets have
served as an appropriate signalling instrument for India’s commitment to
the fight against climate change.
A number of global green
firms like SunEdison are seeking opportunities to invest in clean energy
projects. As India stakes its claims for these investments, it faces
tough competition from other major developing nations. India has slipped
down by one position in the past one year in the 2015 Climatescope
report published by the BNEF, which ranks the top countries for
renewable energy companies to do business in.
Among the 55 countries from
Asia, Africa, Latin America and the Caribbean studied by the BNEF, India
now stands at No. 5, behind China, Brazil, Chile and South Africa. The
top performing states in India are Tamil Nadu, Karnataka and Madhya
Pradesh. In a healthy sign, Rajasthan and Uttar Pradesh, perceived to be
laggard states, find a place in the top 10.
The planned move to establish
the international solar alliance comes at an interesting time. At the
Paris climate talks, many believe that India might be pressured to
accept far more stringent targets than it has committed to. On the other
hand, the initiative of building an international solar alliance will
accord India with a soft power image and leadership position that will
blunt the pressure tactics of the developed countries. The task for
India at Paris, however, remains tough as it has to display its firm
commitment towards combating climate change while at the same time
preserving for itself the rightful space to grow, a process which will
inevitably involve significant growth in carbon emissions. Not
discounting its potential long-terms benefits, an international solar
alliance can be a useful part of India’s balancing strategy in Paris.
Will an international solar alliance help in reducing the cost of solar power?