Bloomberg recently reported that India’s clean tech investments, “reached $10.3bn in 2011, some 52 percent higher than the $6.8bn invested in 2010. This was the highest growth figure of any significant economy in the world. There is plenty of room for further expansion – in 2011, India accounted for 4 percent of global investment in clean energy.” This is pretty incredible considering that India’s energy sources have always traditionally been coal, hydropower and nuclear.
One of the key reasons for the sustainable energy push is the decentralization of power systems especially in rural India. This has brought to light the need for power and the potential for decentralization and has increased venture capital and private equity investments. In 2011, these made a strong comeback with investments totaling $425m.
According to Bloomberg, “wind and solar project developers such as Mytrah Energy India and Kiran Energy Solar Power succeeded in doing deals. Large growth was driven by a seven-fold increase in funding for grid-connected solar projects: from $0.6bn in 2010 to $4.2bn in 2011. Solar almost reached the same level of investments as wind, which totalled $4.6bn.”
India is well on its way to become the ‘Scotland of Asia’ with a national record of 2.827 GW in wind power. This brings India into third place (behind China and the US) for new installations globally in 2011. Grid-connected solar power climbed from just 18 MW in 2010 to 2.777 GW in 2011. Bloomberg New Energy Finance estimates that 2,500MW to 3,200MW of wind capacity could be added in 2012.
Ashish Sethia, head of India research at Bloomberg New Energy Finance, said: “The surge in installation of renewable energy shows that it is becoming cost competitive and scalable, at a time when India is struggling to meet its targets for conventional power capacity. To carry this momentum forward on renewables, federal and state governments will have to ensure four things. First, that transmission lines are available for projects; second, that the grid can handle an increased flow of renewable energy; third, that renewable purchase obligations are enforced; and, fourth, that project developers are paid on time for the power they produce.”
All these statistics are extremely impressive but the sad reality is that many Indians are still without adequate power. Many villages in India still do not have power lines at all. Even in cities, low electricity output leads to frequent power outages, sometimes up to five hours a day. This has impact on industrial productivity – most small-medium industries, shops, and even households resort to diesel generators to generate electricity during these power outages, leading to an increase in air pollution.
Renewable energy is the way forward for India and more investments are surely needed. Electricity grids and infrastructure needs to be improved to ensure that power is not wasted during transmission. Investment in smart grids and other equipment is also necessary – unless all these criteria are met, India will not be on its way towards energy independence.
Image Credit: Akhila Vijayaraghavan ©