Will renewables replace the traditional energy sources of the world? Is the potential as much as its’s being talked about?
In the long run it is renewables, which will be the primary source of energy for all our day-to-day needs. The next two decades may see the rise of natural gas to replace many other fossil fuels. However, the years after that may well belong to renewables such as solar.
As per a forecast by the Scientific Advisory Board to the German government, by the year 2100, renewables will occupy 85% of the total energy space and balance 15% will be served by the fossil fuels such as coal, oil & gas. Amongst the renewables, solar will occupy maximum space, i.e. 70% of total.
We will then be going back full circle, to the same old natural energy sources, with which mankind started its journey, i.e. sun, wind and bio-energy. I believe the renewable potential is simply enormous, broadly because of five key factors:
1. Looming energy deficit;
2. Compulsion to shift to environmentally benign sources of energy due to climate pressures;
3. Need to bring vast hinterlands under the energy map, for which off-grid solar would provide the best possible solutions;
4. Ever-decreasing trend of renewable prices due to technological advances and economies of scale; and
5. The likely pressure on fossil fuel prices to catch the upward trend, the current lower oil prices notwithstanding.
Will the current lower oil prices impact the growth of renewables?
As per an estimate, oil price of above US $60per barrel makes most renewables energy sources economically viable. Therefore, one may argue, the glut-led oil price crash from about US$ 115 to US$ 30per barrel in last one and half years might have dashed the hopes for a faster revival of the alternate energy markets.
Since the current crash has primarily to do with the complicated polemics for oil market control, nobody knows how soon prices will revive. I believe renewables, especially solar and oil, do not have a hyphenated relationship anymore and solar will grow irrespective of the oil price trends.
The other factors, which I mentioned earlier, have already weighed in quite handsomely to bring the renewables to the forefront of boardroom discussions and the trends are likely to continue. Moreover, policy support for renewables from the Governments around the world is likely to continue to be strong.
Why do you say off-grid solar would provide the best solutions to bring hinterlands under the energy map?
As per a solar mini-grid study by the Think Tank, Observer Research Foundation (ORF) way back in 2005, a village is labeled electrified, if electricity is provided to key public places in the village & at least 10% of the village households are electrified. This definition provides tremendous scope for electrification of huge number of remaining households.
Another key issue is availability of power at the most desired hours, i.e. during 6pm to 9 pm, for which the current Government is taking many positive steps towards energy inclusion.
The ORF report further says that at a distance of just 15 km from the grid, coal (grid) power is uncompetitive with solar power, if one includes the infrastructure, maintenance and distribution costs. If we include the cost of transmission losses, which could be to the tune of 25%, coal (grid) power will be further uncompetitive.
Of course, after this study was published in 2005, the solar prices have dived down much faster, thereby making solar energy much more attractive. Given these assumptions, I believe, off-grid solar could be the only answer to energizing rural Indian households at relatively lower costs.
Battery backed energy storage for usage after sunset or during no-sun days is also a key issue. Battery backed solar products increase solar power costs from about Rs 5 per unit for grid-connected-solar to upwards Rs 15 per unit, making them very uncompetitive.
Today, billions are being spent worldwide by companies like Tesla, Panasonic, Nissan, etc. for quantum improvements in energy storage technology, especially in Lithium-Ion, the same batteries used in our mobiles.
Breakthrough in energy storage technology will definitely provide a huge fillip to government and industry alike for speedier move to solar power in the hinterlands through storage backed off-grid solar systems.
How will renewables make a difference to the common man? For example, will renewables ever replace commonly used liquid fuels like petrol, diesel or kerosene?
Out of the three daily usage fuels mentioned by you, kerosene used for lighting has been a favorite candidate for replacement by solar energy. Almost the entire rural solar initiative in the third world countries has been in this direction.
During the mid-2000s, the CFL-based solar lanterns used to be sold at a pricey sum of Rs 5,000 apiece. The advent of LEDs has reduced the solar panel size requirement; and now prices have gone below Rs 1,000 apiece, thereby making market penetration relatively easier.
However, one of the key obstacles to wider adoption in rural areas has been the attitude and perception that ‘energy should be free’ or ‘use as much energy as you can with a fixed monthly price’, which is prevalent in many States in India.
Even a few operational mini/micro-grids, which are operational today, have been struggling to stay afloat, with difficulties in collecting monthly tariffs. Most such projects have been implemented either through grants or CSR funding.
However, given the inevitable increase in cost of grid-power and pressure on climate change, it is a question of time before grid-power will price itself out of most of the markets, including rural India, in favor of solar.
Regarding usage of petrol and diesel, especially for urban personal transport, I think, in the medium to long-term, battery-cars viz. Mahindra e2o, Tesla, Nissan Leaf, etc. would provide the best alternatives, which may again be powered by solar energy.
One of the key innovations, which the entire world is eagerly waiting for is a “high range low-cost powerful battery”.
Such a promise has led Tesla and Panasonic to join hands to invest about US$ 5 billion in a Lithium-Ion battery manufacturing plant, called “Gigafactory-1” in Nevada, USA, which is slated to start production in 2017.
This 1,000-acre factory will manufacture enough batteries to power 5 lakh Tesla cars every year and the production cost is expected to be 30% lower than the existing costs.
Regarding use of liquid fuels, especially for public transport, one silver lining worth mentioning is the bus transport system in Stockholm, where biogas from sewage waste is used as fuel to run more than 400 buses.
Admirably, Stockholm plans to make its entire transport system fossil-fuel-free by 2025! The future of world’s public transport may well be based on biogas from sewage waste, which is naturally renewable!
In Conversation with Mr. Bibhuti Pradhan from Indian Oil Corporation’s Corporate Office CSR Cell. (In Conversation with Bibhuti Pradhan)