The comprehensive electrification of the energy system will be key to the global economy and India’s ambition to achieve Net-Zero — powered by renewable energy, to decarbonise all constituents of the economy, including electricity, industry, mobility, the built environment, and agriculture.
According to a joint report by the Indo-German Energy Forum and the Bureau of Energy Efficiency (BEE), the adoption of relevant technologies can facilitate the electrification of 90 per cent of India’s energy needs, while replacing fossil fuel-based technologies alone can result in an estimated 55 per cent reduction in emissions.
Electricity is a more efficient energy carrier compared to fossil-fuel-based systems; for example, electric vehicles cover greater distances per unit of energy input, and electric heat pumps generate more heat per unit of electricity. The International Energy Agency (IEA)’s energy modelling suggests that the World’s energy consumption will fall by as much as 15 per cent compared with current levels by 2035, partially attributed to the electrification of the energy system, even as GDP continues to grow.
Lower energy consumption resulting from electrification leads to reduced carbon emissions. Moreover, replacing fossil fuels with electricity can also improve air quality, a benefit that is often overlooked.
Electrons for mobility
One of the most visible and impactful opportunities for electrifying any energy system is presented by the mobility sector. Reorienting energy generation towards renewables, debottlenecking transmission networks, and creating grid storage capacities can expedite this process.
On the consumer side, the affordability of electric vehicles, hydrogen fuels, smart energy grids, assured buy-back and life-cycle performance guarantee schemes are establishing robust ecosystems to meet the evolving expectations of consumers, industry, and households across geographies, sectors, and use cases.
Technologies should be deployed through phased interventions to boost electrification across the energy sector. In the first phase (up to 2030), the focus should be on bringing to market electric solutions with high technology readiness levels (TRL 7 to 9). Such solutions have already achieved financial and technical materiality, including the rapid deployment of round-the-clock renewable energy, the electrification of heavy vehicles/small boats/intra-city air cargo delivery, as well as electric melting furnaces.
At the same time, significant early-stage investment is required in technologies such as electric kilns for cement manufacturing, green hydrogen for industrial and shipping applications, and electrolysis for reducing mineral ores, which should be prioritised.
In the second phase (2030-50), the market will take off with clean electricity technologies that have achieved critical maturity from the first phase. It is envisaged that railways, fertilizers and textile industries will achieve full electrification during this phase. This phase will pave the way for investments in small nuclear reactors for clean energy, electric blast burners for large industries, and direct air capture powered by clean energy, among others.
Their clean energy-based architecture will allow them to achieve a competitive advantage over fossil fuel-based solutions.
The third phase (2050-2070) becomes an era that deploys a fully indigenous, scalable, and cost-competitive technology stack emerging from the path-breaking innovations of the second phase. It entails deploying 3,500 GWh of battery storage and producing around 55 million tonne of green hydrogen for energy storage and feedstock.
This phase can focus on the rapid increase offtake of renewable electricity-powered green hydrogen in diverse sectors. The sectors that are expected to undergo a fundamental energy transformation in this phase are shipping, iron and steel, aluminium, glass, and cement. Using this, India can achieve high-impact targets, such as electrifying 75 per cent of the entire mobility sector (including tractors, shipping, and possibly aviation). Truly breakthrough technologies, such as fusion, harnessing space for energy, direct air capture technologies, and enhanced geothermal energy, will reach critical mass at this stage.
Electrification of the energy system is not just about deploying technologies, but also about manufacturing them domestically and developing a resilient supply chain to ensure the country’s energy security.
Policy, financial interventions
A combination of financial incentives and market instruments can be deployed cleverly to develop and accelerate the deployment of electrification technologies at various stages. On the one hand, the country continues to provide policy impetus for generating renewable energy. On the other hand, it provides incentives to users who replace non-electrified processes with electrified ones, such as electric vehicles.
Currently, renewable energy accounts for only 25 per cent of India’s energy consumption, and this share is increasing at a steady pace. While policy incentives need to continue, the government should follow up with measures such as carbon pricing at a meaningful rate as disincentives to carbon emitters. Since the government has a limited capacity to provide financial support, revenue from the carbon pricing policy can serve as additional funding for the exchequer to support decarbonization.
The government should also act as an entrepreneurial financier for technologies at a very early stage, to attract private investors. The recently launched R&D-Innovation fund by the Centre can be strategically positioned to support decarbonization technologies, enabling them to generate a meaningful return on equity for the government while providing it a competitive advantage on the geopolitical front.
Similarly, to secure supply chains for copper, nickel, cobalt and rare earth minerals that typically break even after 10 years, demands serious government intervention. Hence, diplomatic outreach for securing mining rights in other countries should be an integral part of our energy strategy.
It is worth noting that the decarbonization of India’s economy will have a direct impact on its imports of crude oil, natural gas, and coal. Electrification can help achieve the country’s dual goals of energy security and net-zero targets.
By Prasad Ashok Thakur is an alumnus of IIT Bombay and IIM Ahmedabad; Labanya Prakash Jena is Director at Climate and Sustainability Initiative (CSI) and Visiting Senior Fellow, London School of Economics and Political Science. Views expressed are personal.
Originally published in The Hindu Business Line.