Tag Archives: India

India: A Rising Star in Solar Power – 1/27/17

Falling costs and competition among developers are sending solar power prices plummeting around the world, but solar’s success in 2017 could depend heavily on one nation: India.

As the second most populous nation and one of fastest growing economies in the world, India is set to invest heavily in electricity generation — something that will conflict with its air pollution reduction goals unless it uses more non-coal fuel sources. To solve the issue, India adopted auctions in 2010 to help achieve Prime Minister Narendra Modi’s solar target of 100 GW of capacity by 2022.

In 2016, both Chile and the United Arab Emirates used auctions to develop solar projects for less than half the 6 cents a kilowatt-hour average global cost of coal power. Fortunately, the price paid for solar power at auction in India is following the same trend, according to Bloomberg data.

India is also expected to add nearly twice as much new solar as last year, according to forecasts by Bloomberg New Energy Finance.

The most conservative estimate from the forecasts put India’s solar additions at about 8.9 GW of new capacity in 2017, nearly twice the 4.5 GW last year.

The rapidly falling prices are made possible by the consistent decline in costs associated with manufacturing. Silicon modules used in solar panels are were 30% cheaper in 2016 than the year before, and prices are expected to fall another 20% in 2017, according to London-based BNEF. With the expectation of further cost declines, developers have been willing to cut prices below costs for the sake of securing contracts.

India: The Next Driver of Energy Demand – 12/9/16

Access to electricity can vastly improve quality of life and promote economic prosperity, but supplying electricity has its own costs as natural resources, infrastructure, and the environment can be strained when trying to meet increasing demand. Balancing the costs and benefits of adding new capacity is vital as energy demand increases in developing nations. Two nations facing especially large opportunities and challenges as they try to maintain that balance: India and China.

In the case of China, the government is already facing the aftermath of industrialization as air pollution has become a major concern for the country’s growing urban middle class(5). Their concerns about air quality come in direct conflict with the need to create more electricity generation capacity while coal remains a popular fuel in power plants. And India will face similar issues in the near future. According to the IEA, India is likely to become the new driver of global growth in energy demand by the mid-2020’s as the nation’s economic growth surpasses China’s and it becomes the most populous nation in the world(3).

Both nations use coal for a majority of their electricity generation. However, only India’s use of coal is expected to increase substantially in the future. The U.S. Energy Information Administration (EIA) projects that India will account for nearly 50% of the increase in global coal consumption from 2012 to 2040(4). By comparison, the EIA projections show coal consumption in China peaking in 2025 before steadily declining through 2040.

The Indian government has expressed plans to address its coal use in a variety of ways. Indian Prime Minister Narendra Modi has set a solar power target of 100 GW of capacity by 2022 with a capital subsidy of around $2.51 billion provided to develop rooftop solar projects across India, according to an official press release from the Ministry of New and Renewable Energy(7). His government also promised to double the share of natural gas from 7% to 15% in electricity generation(8). Emissions associated with combusting coal (206 to 229 lbs CO2/MMBtu) are higher than those associated with combusting natural gas (117 lbs CO2/MMBtu) helping to reduce air pollution without relying on intermittent power supplies(2).

The Chinese government has made similar promises saying it hopes to boost the share of natural gas in its energy mix to 10% by 2020 through favorable policies like an adjustment of pipeline fees to stimulate use(1). It has also aggressively promoted wind and solar power though its utilities now struggle to integrate the intermittent power supplies into the power system where distribution infrastructure cannot keep up. As a result of overbuilding, the country’s energy authority slashed wind and solar targets through 2020 in November of 2016(6). In its newly issued five-year plan for power, China’s government set new targets in which total installed solar capacity was revised to 110 GW by 2020, down from an earlier target of 150 GW. For wind power, the government now aims for 210 GW of installed capacity, down from 250 GW.

Wind Rises, Carbon Falls – 6/8/16

Investors are beginning to talk with their feet as they shift money from fossil fuels to renewables. As wind rises on a tide of money from European investors looking to take advantage of the change, carbon falls under the weight of increased competition and regulatory risks.

The GWEC recently launched its Global Wind Report: Annual Market Update. The report shows the wind power industry set new records across the world last year in capacity installation as wind power installations broke through the 50 GW barrier for the first time in a single year in 2014 and annual installations topped 63 GW in 2015.

At the start of 2016, there was near 433 GW of wind power installations around the globe, a 17% increase over last year, according to the International Energy Agency. China alone added 30 GW in 2015 and now has more than 146 GW installed. China’s new Five Year Plan covering the period from 2016-2020 has increased the 2020 target for wind to 250 GW likely due to air pollution and energy security concerns.

European installations were led by Germany’s 6 GW of installations, more than 2 GW of which came from offshore wind. In non-China Asia, India became the nation with the fourth highest amount of cumulative installations as it surpassed Spain in global rankings.

U.S. states in the Plains region have had lower prices for wind power than most for a while now, but an uncertain regulatory environment has hampered the development of the U.S. market. The catalyst for the rise in U.S. investment in wind came from the unexpected extension of tax credits for wind and solar projects in late 2015.

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In contrast to the boom wind is experiencing, fossil fuel assets are being eyed with suspicion by U.S. insurers who see many energy-related investments at risk of becoming stranded assets due to climate change concerns.

European fossil-fuel companies in particular are seeing their value decline as countries shift their focus to renewable energy. Sovereign wealth funds and European insurers including France’s Axa SA and Germany’s Allianz SE committed to exiting some coal-related holdings as global leaders commit to fighting climate change.

In the U.S., California Insurance Commissioner Dave Jones urged insurers to voluntarily divest from thermal coal, and is requiring annual disclosure of carbon-based investments.

“If the international community, nations, states and local governments adopt the policies necessary to limit global warming to 2 degrees Celsius, then the value of holdings in the carbon economy will diminish dramatically if not drop to zero,” Jones said in an interview.

Solar Power: Opportunities and Challenges – 2/7/16

2016 has only just begun but solar power is already set to have a year filled with record capacity additions and regulatory battles.

Japan, Germany, India, China, and the US are a few of the most vital sources of growth for solar power capacity. As five of the world’s largest economies, they are also battlegrounds for the future of electricity production.

Japan’s cabinet recently approved overhauls to the four years old incentive program for clean energy. The cabinets introduced auctions for solar projects similar to those used by Germany and India as a means of managing installations and cutting power costs. According BloombergBusiness, Japan projects renewables will provide as much as 24 percent of its power supply in 2030, according to a plan announced in July.

China added 15.1 GW of new solar last year for a total of 43.2 GW according to the National Energy Administration, which puts the country ahead of Germany in total capacity. China’s solar-based electricity production has increased by over 1300% since 2011 amid the country’s attempts to cut emissions. Solar and wind producers have benefited from heavy investment by the Chinese government as it has tried to reduce a reliance on coal that has caused dangerously high levels of air pollution.

For the US, the battle over solar’s future is still undecided. Opposition from utilities and skeptics in government has given proponents of the solar industry a difficult time securing policy victories but many recent successes show building momentum for favorable legislation. In the case of SolarCity, arguably one of the most visible solar companies, anti-solar policies of states like Nevada, where the PUCN reduced net metering return rates and increased fees for residential PV producers,  have been balanced out by policy wins in states like California, where regulators have supported preservation of retail payments for residential rooftop PV. Though news has been mixed for the company, its ability to stand up to utilities indicates growing political clout for large solar companies.

Demographics Threaten Asian Economies – 12/06/15

Demographic trends – long-term changes in the makeup of a population – drive or are driven by major turning points in human history. Improvements of technology lead to booms in population size, lower maternal mortality rates, and mass migrations. In the 21st century, the trends differ significantly from those of the past. Developed countries in Asia and Europe face especially troubling demographics trends such as graying populations, something that weighs down economies where fewer workers must provide for increasing numbers of elderly non-workers, and disproportionately high male-to-female birthrates in China and India, artifacts of cultural practices encouraging the birth of boys and the selective abortion and abandonment of girls, leaving the countries with skewed sex ratios and significantly weakened growth prospects.

In recent years, Japan has faced significant issues related to the aging of its populace as roughly 25% are 65 or older, a proportion likely to increase given low fertility rates and high life expectancy. A lack of young workers combined with a reluctance to expand immigration programs has encouraged the development of automation techniques and ways to utilize the elderly who still wish to participate in the labor force but leaves Japanese companies short-staffed. Low expectations for long-term growth have also scared off much needed capital investments. Though Japanese policies and technical innovations will  help to cushion the impact of an increasing number of dependents per worker, this greying trend is the new normal for developed countries. The aging of Japan represents a dilemma that many of the most populous and developed countries will face within a few decades.

China and India may face their own demographics crunches brought on by a lack of women. In China, a combination of One Child policy, Confucius traditions  encouraging a strong bias towards male heirs, and increasing urbanization has left the country with a dangerously skewed sex ratio, following years of anti-female birth practices, and a population with little incentive to the additional girls needed to sustain the society. Though the government scaled back its restrictions on the number of children each family could have, a slowing economy has discouraged families already having fewer children due to less need for large families in the urban area where an educated few tend to be more successful. India faces similar issues due to a patriarchal society and dowry system which have made having a female baby a social and financial liability.