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?