“You may be competitive in hundred other things but if you are not competitive in solar manufacturing right till the back-end, do not attempt that, and rather get into an area where you will be globally competitive,” Kant said.
NITI Aayog CEO Amitabh Kant shared a perspective on India’s energy sector and the larger economic scenario at an industry event on Friday. Edited excerpts..
Power generation will be driven by renewable energy by 2050. What is your view on the strategic transformation that is taking place both in the world of energy and mobility?
Let me give you an Indian perspective because automobile and auto components play a very critical part in India’s manufacturing. They play a very critical role in job creation. The segment contributes almost 7.2 per cent of India’s GDP. So, it is very important to first understand that as we move from combustion vehicles to Electric Vehicles, we need to ensure that this shift has long-term predictability and consistency in policy.
We are a centre for compact car manufacturing and we create over 35 lakh jobs from this sector. We need to ensure that this manufacturing and these jobs do not get impacted in any manner in that shift. It is important to understand that it is going to be a gradual shift over a period of time. It has to be a gradual shift because the cost of EV as of now is still very high and it will only be by 2026 that the cost of EV will be at par with combustion vehicles, which will be significantly determined by the cost of the battery and which, to my mind, will be a period of another 5-6 years. India’s advantage is that the number of persons owning cars is just 20 per 1,000 as compared to say 900 per 1,000 in the US or 860 odd per 1,000 in Europe and therefore India has a huge advantage of shifting towards EV. There is no lock-in cost right now and as we move in, we will be able to make an incremental shift towards EV.
India has the lowest cost of solar and wind in the world but we are hugely reliant on coal. Much of the debate in the last five years has been on coal shortage. what is going to be the way in which India will move away from coal?
Whether it is going to be coal or renewables is going to be a function of the market. It is going to be function of economics as we go on bidding for renewable power. If the cost of renewables falls sharply, the country is going to shift towards renewables, whether we have a huge amount of coal or not is not an issue. The issue is, how sharply the cost of renewables falls. The critical issue across mobility and energy is energy storage and grid management. A critical issue will be grid management and our ability to make a quantum technological leap forward and that is really the future of both mobility and energy – to have storage batteries.
The issue about coal and renewable and the issue about EV versus combustion vehicles is not really something which you and I will determine. It will be an issue which will determined by innovation and our ability to make prices fall in renewables and also the ability to make the cost of EV fall very rapidly. The day that happens you and I will switch over to EV. I am totally against a policy where you drive EV thorough large scale subsidies, that is not sustainable.
This government has been extremely supportive of renewables in terms of policy framework. What are the major challenges for growth of solar and wind energy in India?
My view is that increasingly India should do large-scale bidding of solar linked to storage batteries. The future lies in storage batteries. It is not about just creating renewable power. It is also about creating the grid to manage fluctuations. Solar has huge fluctuations and, therefore, you need to create the grid to back that up. You need to link solar to storage batteries. That is the future and that is the technological leap which India needs to take.
Are you suggesting that we need to be investing more or are you expecting Indian companies to invest in technology?
I expect the government to be facilitator, a catalyst, to create an ecosystem for private sector investors to come in. It is not the government which drives innovation. The government becomes a catalyst for greater amount of innovation and disruption to take place and therefore structuring of bids should be based in a manner where it should be able to drive many of these changes.
What is being done to boost domestic solar manufacturing capabilities. Most of the domestic players especially the solar players are into assembling.
I am not a great believer in protectionism. I am a believer in globalisation and a believer in India being an integral part of the global supply chain. Either you are competitive or not competitive. If you are not competitive, do not try and manufacture something (in an area) where you are not going to be competitive. You may be competitive in hundred other things but if you are not competitive in solar manufacturing with the entire back-end, right till the back-end, do not attempt that, and rather get into an area where you will be globally competitive. And if you want to be competitive then make sure that you do it in size and scale. If you miss that then get into an area where you can be a global champion, like we are in compact car manufacturing. You need not necessarily be a global champion in every area of manufacturing.
Battery costs have dropped by 80 per cent since 2010. What needs to be done to increase the domestic manufacturing capability?
Firstly, our policy needs to be based on shared, connected and zero emission future. That is where we should eventually focus on. It is not going to happen overnight. That would really require costs to fall on the battery side. So, there are two challenges. One is on the innovation side and the other is on the availability of cobalt, nickel and lithium across the world. Also, we need the ability to break away from lithium and get into new areas where you can drive EV with batteries made out of different materials. There are a vast number of start-ups who are doing work in these areas. In 3-4 years, we will have a completely new alternative technology. So, these are areas of huge disruption and India should allow many disruptions to take place.
Should the government incentivize R&D in these areas for the big as well as small players as a policy?
We have seen a lot of unique start-ups which are doing work in many of these areas, especially towards public transportation. There are a number of start-ups which are working on public transportation and swapping in three-wheelers. I think our policy should be geared towards two-wheelers, three-wheelers and public transportation. You have an example of Ampere in Bangalore where IIT graduates from Chennai have brought out an electric smart scooter which has the potential of being the Tesla of the scooter world. You have Sun Mobility working on swapping of vehicles for public transportation. A number of start-ups and entrepreneurs are working in these areas and I am sure many of them will succeed.
Renewable energy needs grid access and grid being a regulatory area, what can change in the regulator environment to make it more conducive for business and accelerate the adoption of renewables?
A big challenge lies on the distribution side as many of the DISCOMS do a lot of cross-subsidization. They must realize that electricity should be run like great business. DISCOMS should be commercially viable, profitable and in the long run India will gain if DISCOMS across the states do good business and are completely de-politicised. I think there is a dire need for a national DISCOM company. India needs to push for a national DISCOM company as we have a national grid company. In the power grid sector we need to bring in private players and allow competition to take place on the grid side. The private sector will bring in good technology. My belief is that in the long-run great things happen when we develop a policy for private sector to come in and do work.
On one hand we have stressed assets, bad loans, fuel shortage and the NPA issue in the power sector and on the other hand we have excitement and new innovation with solar and wind tariffs falling. Where do you see power generation in the next five years? Is this headed towards a resolution of some form? Will technology aid in the resolution process?
One of the biggest things done in India is the structural reforms of GST, NCLT, IBC and that really shows that crony capitalism in India is dead now. You have seen huge examples of complete take-over by NCLT process by other companies and therefore private businesses will be much more disciplined. If you do not pay up the banks you will lose your business. Why have assets on the steel side succeeded? We have many buyers for steel companies. Why has that happened? It is because we were able to create an ecosystem of steel demand in India, despite a huge amount of imports from China. We were able to control the flow of steel from China. Steel demand has never been better in India then now. You have created a demand for many buyers to come in and that demand was created by the government through its policy framework. In the power sector too we need to do the same thing. We need to create demand for power. In the power sector, we need to take very strong decisions. We need to clean up the cities to get rid of petcoke, furnace oil, coke and a vast number of dirty fuels which are being used in India. On the environmental side, India needs to be very tough. We cannot afford to have 14 of our cities as the worst in the world.
Taking the point of environmental sustainability as a pitch, what can state governments do on public transport options?
Every state across India should push for public transport through EVs and they do not need to do it by outright purchases of vehicles but they need to do it on contract basis. The contract should be so structured that it should be on a per kilometre basis. In NITI Aayog we are structuring a contract on that basis, which will be made available to all the states so that all the states can go without ownership basis, but on a per kilometre basis. And I think every municipality should go for Electric buses.
Source: energy.economictimes.indiatimes
