To feed its growth, India weighs coal subsidies against solar ones

Sustainable Energy

To feed its growth, India weighs coal subsidies against solar ones

By Anonymous (not verified), October 29, 2012
Mera Gao Power: Men installing solar panels
Mera Gao Power: Men installing solar panels

Could decentralized, solar energy be the solution to India’s power poverty?

Indian solar advocates are sounding alarms that government response to the country's giant blackout could only deepen existing subsidy of the coal industry, raising the question: Would solar investments be better for India's economy in the long run?

The pollution-belching coal industry can’t keep up with demand; the coal-driven grid is wracked by corruption; and the advantages of solar power are already blossoming in both poor and rural India.

In early September, NPR reported on blackouts and workhorse generators that private entities employed when the centralized power grid failed. Because middle-class Indians demand continuous energy, they spend $8 billion a year on diesel-run generators; that’s three times “what it would cost to produce the same amount of energy with state coal-generated power.” Regardless of how the energy is produced, NPR’s Julie McCarthy explains, “whether India becomes a 21st-century powerhouse, whether it continues to pull millions from poverty all rests on its capacity to produce enough electricity for everyone.”

This crucial fact leaves some renewable energy leaders like Harish Hande of SELCO worried that the Indian government will push for more coal or nuclear plants rather than support a fledgling solar industry, reported Bloomberg Businessweek.

Hande’s fear is not a small one: “The state-owned Coal India Limited (CIL) is the only agency which sells coal in India. It is also the world's largest producer of coal - during 2011-12, it produced more than 435 million tonnes,” reported the BBC. Just weeks after the blackouts, reports emerged that $33 billion was lost due to mis-selling of coal fields, resulting in “Coalgate,” one of India’s biggest scandals in years.

The industry is subsidized from abroad, too. The Nation reports that “World Bank Group lending to coal, oil, and gas is up 94 percent from 2007, reaching over $3 billion. Coal lending alone has increased an astonishing 256 percent in the last year.”

CIL divvies up coal plots through a Byzantine process wracked by graft, reports The Nation in an article that questions how a country as rich in coal as India could have such disastrous blackouts. “Theft and corruption have played a role in India’s power failures for decades” -- hurting the wealthy in the form of graft and the poor in simple theft. In fact, The Nation reported,“as much as 40 percent of India’s electrical power is stolen."

Some believe building more centralized, coal power plants is not the answer, because the coal system is already debilitated by scandal, inefficiencies and decades-long subsidies from the World Bank.

Had the bank heeded its own studies in the early 1990s, which showed that a more economically efficient way of handling the energy needs of the poorest in rural areas would have been to invest in renewable energy, many of India’s energy and environmental problems would have been solved. And had the World Bank focused on its mandate—providing energy for the poorest, rather than rich urban areas, and businesses—India might have ramped up its use of renewable energy to a level comparable to Germany’s, which, with far less insolation, recently derived 40 percent of its electricity from solar power.

Rather than “How did coal-rich India end up with power blackouts?’ maybe The Nation’s question should have been, “Why didn’t India opt for renewable energy?”

Last year, India did invest $12.2 billion in green energy, and through a “Solar India” policy the government pledged “to install 20,000 megawatts (Mw) of grid-connected and 2,000 Mw of off-grid solar power by 2022,” reports the Business Standard. However, India's 1 gigawatt of solar power is just 0.5 percent of its total power consumption.

But bear in mind that 400 million Indians don’t even have access to energy, even the unreliable kind. As the Indian government continues to strike out with the big grid,private social entrepreneurship is stepping up to the plate with a solar bat. Dowser reports on several social entrepreneurs that “are pioneering a decentralized energy paradigm, characterized by improving efficiencies that bring energy cost into parity with grid alternatives, and contribute to economic development and the eradication of poverty in rural areas.” These entrepreneurs include Bihar-based Husk Power Systems; SELCO India, operating out of Karnataka and Gujarat; ONergy in Kolkata.

Solar solutions are simply more flexible, both for urban communities during peak demand as well as rural localities that are off the grid. Mera Gao Power in Uttar Pradesh is a perfect example of a private company that offers an adaptable, efficient alternative to centralized coal power. The Guardian reports on this company, set up in 2010 by two Americans, Nikhil Jaisinghani and Brian Shaad. At the village level, the company sets up micro grids, which provide low cost energy for small appliances and mobile phone charging services. After about 18 months to three years, the company can recoup its costs.

Jaisinghani and Shaad, with the help of a grant from USAID, believe in the power of business to support social and environmental causes."Donations run out eventually," said Jaisinghani. "But if we can create a system that is self-sustaining, it can serve these communities well into the future."

Business Today delves deeper into how this for-profit company works. It explains that it’s difficult to gauge the efficiency of the micro-grid model, because there isn’t much precedent or comparison. Mera Gao's solar energy costs more than state-powered coal energy would in the city, but that’s not an option for these rural communities.

The following video provides more insight into the aims of Mera Gao Power and how it’s working to provide low-cost energy to off-the-grid Indian villages.

There’s more to be said for the fact that solar solutions are based on an unending supply of renewable energy and don’t contribute to greenhouse gases or toxic fumes associated with coal and kerosene. There does seem to be a tremendous opportunity to both reach rural, off-the-grid communities and urban centers that must resort to polluting generators when the centralized grid fails. Market-driven solutions from companies like Husk, SELCO, ONergy and Mera Gao Power are out there, but they’re facing serious hurdles in the likes of entrenched coal, high startup costs, and the timeless impediment of going against the grain.

RELATED: Solar panels meet Android tablets in Uganda, and farmers win

Curated news and insights about innovative, market-driven solutions to poverty explored through news, commentary and discussion.

Learn more »

Global Envision newsletter