Solar Alliance-Does it Make any Sense?

New Delhi, March 12, 2018: International Solar Alliance (ISA) summit is taking place in Delhi attended by representatives of over 60 countries, who are prospective members. There are heads of states and senior ministers from these countries. There seems to be a good representation from African region. The French President Emmanuel Macron is also present at the alliance meeting.

The big question that is asked in the policy circles is what would be the ultimate benefits that the participating countries including India from the alliance.

First and foremost, the alliance will create an environ for more research and development into alternative sources of energy; how that can supplement and complement or replace the traditional sources of energy such as coal, fuel etc, which are exhaustible and that way not sustainable.

Also, considerable research is underway to reduce the prices of solar cells, batteries and equipment that trap and store wind and solar energy etc.

Solar and wind energy are not exhaustible . Then the natural question is why they are not being tapped even in countries where they are available in plenty. It is the cost of generation and storage. While cost of generation is within limit, storage seems to be costly.

A recent statistics compiled based on Indian experiences indicate that while the cost of generation is roughly over one rupee per unit, the cost of storage is upwards of Rs 11, making the use of alternative sources of energy uneconomic. The challenge ahead is to bring down the cost of battery and storage to reasonable limit between Rs 2 and 3. Considerable research has to go into it to develop such technologies.

World –over there are R&D efforts are going on to develop cheaper methodologies and equipment to store generated electricity through alternative sources and to feed them to the general grid. Yet, it may take a long time to switch over to these clean energies which do not leave any carbon footprint since it is highly economical for a country like India to use coal based energy.

What will India gain from holding Alliance Summit? There can be two tangible results-geopolitics and two energy security. China is a major player in the alternative sources of energy and soon that will be a major strength that it can command among the comity of nations since many countries, especially in the African region, where energy security is a far cry- is looking at alternative sources of energy to bridge the energy gap.

India has to develop its strengths from the scratch in this domain to catch up with the rest. Also, there are threats from both China and the US to open up India’s market for solar cells and other equipment, which India is resisting to the core. By hosting the Alliancemeeting , India wants to reiterate its commitment towards clean energy and to attract investments in the sector. Some of the French companies like Alstom has already made their intention clear in investing in India in specific sectors like railways to reduce dependence on traditional sources of energy. The other pay off is that the ISA headquarters is going to be in Gurugram, India.

While all these developments are happening, a recent report of the International Energy Agency has said that the US, followed by Canada and Russia are going to be the major players in Big 5 of the oil rich countries. Contrary to popular perception, there are only two countries-Saudi Arabia and Iraq- are there in the group. Also, the report said that very soon the US oil production will touch on an average 11 million barrels a day more or less the same level of Saudi Arabia. Also, the US will have the advantage of shale gas, though commercial exploitation may take little more time.

Does it mean that lever for dictating oil prices is shifting from OPEC to US and its allies? The bottom line is that when the US is endowed with such vast pool of conventional energy, will there be any cutting edge technology coming out from there to replace the oil, such as electrically driven vehicles, hybrid vehicles etc. That indeed is a pertinent point.