Transmitting renewable energy through decentralization
While India has been at the forefront of the development phase for the supposed demographic dividend in the post-COVID era, there has been concern regarding energy security and environmental sustainability that accompany these developments. Recent events such as the Russian-Ukraine war, oil import dependency, and the COVID pandemic have raised concerns about the nation’s energy security. The Indian energy security scenarios website indicates that although energy dependency on oil imports and the use of coal-based energy, which is not environmentally friendly, has been growing slowly in terms of supply until 2047, there are little signs of renewable energy capturing a significant portion of the energy production. Is there a way to turn this around?
The problem lies in power transmission
India generates almost 80% of its power from traditional sources like coal and fossil fuels, which are located far away from consumption areas. The transmission system is the main issue, despite people claiming that the high cost and installation of renewable energy are problematic. It’s worth considering why we can’t install renewables in space-constrained areas. India’s total size is 1.269 million square miles, whereas Germany is almost one-tenth the size of India. The installed capacity for renewable energy is similar, with estimates suggesting that both India and Germany had capacities ranging from around 130 GW to 160 GW in 2022, according to Statista. Therefore, the biggest issue lies in the distribution network. This is supported by recent news that the Ladakh mega solar power project was delayed due to transmission construction issues . It is estimated that India loses an average of 22% of energy during transmission, compared to an estimated 8–10% loss in the United States.
Efforts taken but long way to go
Under GEC, the Inter-State Transmission System Green Energy Corridor Phase-I with a total of 32,000 ckm and two phases of Intra-State Transmission System Green Energy Corridor a total of ~ 20,500 ckm has been approved and introduced for the improvement of renewable energy source transmission. However, if we are to look from the perspective of the total energy transmission ckm, which stands at ~4.6L to 4.8L ckm, the revamp requires much larger scale, capital and involvement from the government side to improve the green and clean energy promotion.
Decentralization is the future
The solution here is to cultivate startups that aim to decentralize power sourcing, thereby reducing the need for extensive transmission and minimizing the distance between power sources and consumption areas. Are there models for achieving this? Of course, some models are already working toward resolving the future through decentralization, particularly in developing countries. One example is Solarity in Chile. In Chile, the problem with renewable energy is different. They already have vast amounts of renewable energy potential and installed capacity. For instance, in 2022, Chile’s renewable energy consumption accounted for 55% of the total energy consumption, making it one of the leading countries in terms of percentage consumption. However, they faced similar issues with ineffective transmission lines and lengthy transmission system construction time. Hence, Solarity came up with the concept of installing small and medium-sized PV cells on the rooftops of businesses to allow companies to benefit immediately from such renewable energy sources.
Another example is in the growing country of Colombia, where an estimated 77% of electricity comes from renewable energy. However, there are many remote and rural areas with limited access to the central grid. This led to Cycle System developing an ingenious idea of an energy decentralization system. The company promotes peer-to-peer energy transactions and you can get a blockchain-based coin which can then be used to convert to fiat currency. They provide microgrids for the isolated communities to promote larger inclusivity and also to optimize energy consumption. Revenue streams can be achieved in multiple ways — device sales, transaction commission and also information management.
Gross billing to net billing
One of the main reasons which is interrupting the full scale adoption of solar power and other renewable energy is the problem of net-billing. So, just to make things clear — The energy which is being utilized and the power generated by a same person will be billed in two ways — gross and net-billing. In net-billing, if you are generating say 10Kwh and consuming 15kwh , you will be asked to pay (15–10) = 5 * average tariff rate (say ~INR 9) = INR 45. In gross metering, with same generation and consumption = you will be paying and 15*9 = INR 135 and you will receive 10*(Average feed-in tariff rate ~INR 4 per unit) = 10*4 = INR 40. As you can see the difference in metering method can cause a difference in benefit for the prosumers (producer-consumer) and in a way discourages big businesses. In India, the net metering is valid on range of until 500KW. So, for the industries, which consume ~41% of energy demands as on 2021, the introduction of net billing for all eletricity loads can drastically improve the energy production in the country and can help in self sufficing along with the startups which can help in decentralizing energy production.
Conclusion
India’s energy security and environmental sustainability are at a critical juncture. While the country has made strides in its development phase, there is a pressing need to address the challenges in power transmission and accelerate the adoption of renewable energy sources. The distribution network, rather than the cost and installation of renewable systems, poses the biggest obstacle. The future lies in decentralization, where startups can play a crucial role in bringing power sources closer to consumption areas and reducing the reliance on extensive transmission networks. By promoting and supporting these innovative solutions, India and other developing countries can overcome its transmission challenges and achieve energy security while contributing to a more sustainable future.
Disclaimer: Certain information contained in here has been obtained from third-party sources. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. This piece doesn’t represent any institute or organisation’s stand or opinion and its purely a personal one.
