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Global Energy Trends and Implications for India: Solar Will Be the Most Competitive Energy Choice

The global energy system is in a period of rapid transformation: electricity plays an ever more important role, as do renewables, distributed generation and electric vehicles. Energy efficiency is improving. Emissions are a large and growing concern. New technologies and business models are disrupting and challenging a traditionally risk-averse and slow-moving industry. The International Energy Agency (IEA) has just published its new “Energy Technology Perspectives” outlining the global trends until 2050 (refer). Here are some of the key findings and the implications they might have for India.

  • According to IEA, solar can become the cheapest source of energy by 2040
  • The IEA considers storage to be of secondary importance in the future energy system
  • In India, according to BRIDGE TO INDIA, solar and storage will become the drivers of India’s energy future

blog 30.4.15

Source: IEA

The Global Context

According to the IEA, in a 2 degrees scenario, solar becomes the dominant electricity technology by 2040, and provides 26% of global power generation by 2050. The IEA says that already today, the “impressive deployment of renewable technologies is beginning to shape a substantially different future in supply”. As the graph shows, if a reasonable price of carbon ($ 100 per ton of CO2, commensurate with the world achieving the 2 degrees goal) is added, the cost of solar is already very competitive – and it will become more competitive over time, overtaking combined cycle gas turbines (CCGT) to become the cheapest source of energy around 2040.

In a high solar scenario, storage will play a role. The IEA thinks of storage mostly as being part of a larger, systemically “smart”, flexible new power grid, wherein it will compete with other options for managing a renewables-heavy power supply. The other options are: stronger grids, international grid interconnections, demand-side measures and flexible, on-demand power generation. Overall, the IEA sees storage as the option of last resort, once all other options have been exploited. Currently 99% of electricity storage is  pumped in hydro storage plants. In future, other forms of storage (battery, mechanical storage, etc.) will become attractive solutions.

Implications for India

In India, solar and storage will likely play a different and a much larger role than in the IEA’s global analysis. Due to the weakness of the grid and the limited alternative energy sources, distributed solar plus storage will be an attractive solution for end-users. As compared to the IEA’s global scenario, the Indian power market will be more consumer-, less infrastructure-driven; more decentralized, less centralized; and see more private sector than government sector initiatives. It will be a default (local solutions to electricity supply shortages) rather than a design market.

Tobias Engelmeier's picture

Thank Tobias for the Post!

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