Green Pathway

Accelerating the clean energy transition in South Asia

While countries across the world are grappling with the clean energy transition, they differ in their motivations, starting conditions, re­source bases and problems. Each co­untry has to find its own path in the transition to clean energy. South Asian countries have much in common in terms of motivations and starting conditions, as well as clean energy transition pathways. The region is characterised by low per capita energy consumption, and the co­u­n­tries are focusing on accelerating en­ergy access for their populations. Clima­te change and high petroleum import bills add to the woes of these countries.

South Asia has huge renewable energy potential, which can facilitate the transition towards clean energy. Over time, renewable energy has become cheaper. The South Asian countries have also undertaken various supply-side (replacing fossil fuels with renewable energy) and demand-side measures (promoting e-mobility and electric cooking) for transition to clean energy. In their clean energy transition journey, South Asian countries can benefit from mutual co­opera­tion. These countries have pro­mised am­bitious emission reduction targets and goals at COP26 in Glasgow as well as oth­er conferences, as a part of the Paris Agre­­ement. There is a need to find a common path that helps all the countries in the region speed up their energy transition.

At a recent webinar on “Accelerating clean energy transition in South Asia”, organised by USAID’s South Asia Re­gio­nal Initiative for Energy Integra­tion programme (currently being implemented by Integrated Research and Action for Development [IRADe]) and Power Line, Dr Jyoti Parikh, executive director, IRADe; Tarun Kapoor, former secretary, Ministry of Petroleum and Natural Gas, India; Mohammad Alauddin, chairman, Sustainable and Renewable Energy De­velopment Authority, Bangladesh; Ma­dhu Prasad Bhetuwal, joint secretary, Mi­nis­try of Energy, Water Resources and Ir­ri­gation, Nepal; Passang Pasang, chief en­gineer, Department of Renewable En­e­r­gy, Ministry of Economic Affairs, Bh­u­tan; Eng. Ranjith Sepala, chairman, Sri Lanka Sustainable Energy Authority, Sri Lanka; Chintan Shah, director, technical, Indian Renewable Energy Development Agency Limited; and John Smith-Sreen, director, IPO, USAID/India, discussed the clean energy transition plans and targets of their respective countries, their experience so far, the issues and challen­ges encountered, and the role of de­ve­lopment agencies and cross-border electricity trade (CBET) in accelerating the clean energy transition. Excerpts from the discussion…

India

In India, electricity accounts for a 16 per cent share of the energy basket, while other use cases such as transport and co­oking, and industries such as cement and steel, which together account for 84 per cent, continue to utilise primary en­ergy sources. Grid-based electricity is witnessing rapid penetration of renewable energy. As per global statistics, renewable en­ergy penetration in the grid is 13-14 per cent, while that in transport and cooking is just about 2 per cent and 4 per cent respectively. Therefore, these areas will need special focus to accelerate the clean energy transition.

At the COP26 climate summit, India committed to building 500 GW of re­ne­wable energy capacity by 2030. Since re­newable energy is intermittent in na­ture, balancing the grid is important to achieve this. India also plans to manufacture 5 million tonnes of green hydrogen per annum by 2030. Instead of electricity, which requires massive infrastr­ucture projects such as transmission li­nes, South Asian countries can manufacture hydrogen, which can be easily transported and utilised immediately across multiple use cases.

In the e-mobility segment, it is expected that by 2030, electric vehicles (EVs) will account for at least 70 per cent of three-wheeler vehicle sales, over 50 per cent of two-wheeler sales and 30 per cent of four-wheeler sales. Further, under the Na­tional Policy on Biofuels, 2018, oil ma­rketers are required to blend 10 per cent ethanol in petrol by 2022, which is expected to increase to 20 per cent by 2025. Similarly, diesel could be blended with biodiesel, although biodiesel is on the expensive side and not much development has been witnessed in the segment so far. In the transport sector, a lar­ge-scale transition to compressed na­tu­ral gas vehicles is expected for heavy tra­nsport buses and trucks, at a faster pace than the transition to EVs. There is also potential for hydrogen blending in the transport segment. The price of green hydrogen has fallen considerably, but at $4 to $5 per kg, it is still expensive. Over­all, the transport segment will see biofuel blends in the short run, and an eventual large-scale transition to EVs.

For cooking, the region is largely dependent on liquefied petroleum gas (LPG); however, with the higher penetration of renewables in the grid, a shift to cleaner electric cooking is possible. It is also possible to create LPG blends, such as with dimethyl ether, which is a derivative of methanol. In the manufacturing segme­nt, the steel and cement industries, whi­ch require high temperatures, are curren­tly dependent on coal. Chan­ges are re­qu­ired in their manufacturing processes for them to switch to cleaner sources.

One way to decarbonise the Indian eco­nomy is to increase the penetration of renewable energy in the grid. This creates a need to balance the grid, for which energy storage, including pumped hyd­ro storage, will be required. Connecting the entire South Asian region can also ma­ke balancing easier.

Bangladesh

Bangladesh has made every effort to scale up clean energy despite its limited re­sources and insignificant carbon footprint. It has been able to offer nearly 100 per cent electricity access, and the contribution of renewable energy in the ins­tall­ed capacity is around 3 per cent. The government has announced a vision to inc­rease this to 40 per cent by 2041, at COP26. It is going to formulate an In­te­grated Energy and Power System Master Plan, which will reflect a detailed transition plan. Further, it is also formulating an Energy Efficiency and Conservation Ma­ster Plan, which will set a target of im­proving primary energy consumption per GDP by 20 per cent by 2030. It will also in­clude an energy management pro­g­ra­m­­­me, an energy efficiency (EE) labell­ing pro­g­ramme, an EE building progr­amme, an EE financing program­me and an aw­areness raising programme.

Bangladesh has an aggregate renewable energy capacity of 780 MW, of which ar­ound 547 MW comes from solar. Althou­gh the price of solar power is decreasing, expansion of utility-scale solar power is still limited, by the scarcity of land owing, to the country’s high population density. Several innovative solutions such as rooftop and floating solar are thus gaining traction in the country. Notably, Bangladesh is home to the world’s large­st rooftop solar set-up in a single location – the 20 MW solar rooftop at the Ko­rean EPZ, Chittagong. The other challenges that Bangladesh is facing in expanding re­­ne­wable energy sources include identifying a viable business model for developing renewable energy plants and ass­essing the potential of renewable energy resources in the country.

To manage the intermittent nature of renewable generation, battery energy sto­rage is a key solution. Cross-border in­terconnections with neighbouring countries is another option, as the wider network offers more potential for balancing intermittency. Bangladesh is already im­porting 1,160 MW of power from India. Me­­anwhile, Bangladesh’s closest neigh­bo­­ur, Myanmar is connected to the ASEAN grid and has a hydro potential of 40,000 MW. Energy trade between these countries can significantly contribute towards balancing the grid in the region.

Nepal

In December 2020, Nepal presented its second nationally determined contributions (NDC) report to the United Nations, committing to meet 15 per cent of its total energy demand through clean energy sources by 2030. The country plans to expand its clean energy generation to 15,000 MW. Meanwhile, EVs are expected to account for 25 per cent of the sales of all private passenger vehicles, including two-wheelers, and 20 per cent of the sales of all four-wheeler public passenger vehicles, in the country. Similarly, 25 per cent of households are expected to be using electric cooking stoves by 2030. More­over, Nepal has committed to net zero emissions by 2045.

The country’s key issues on the clean energy adoption front are its limited power transmission system and difficult geographical terrain. Further, runoff variation in the rivers, owing to the surplus pre­cipitation in the wet season and low rainfall during the lean period, impacts the operation and development of hydro pro­jects. Transmission interconnectivity bet­ween Nepal and India is also poor.

Going forward, Nepal is focusing on modernising and automating its electricity grid to make the system stable. In order to meet the NDC commitments, an investment to the tune of $25 billion will be required, for which support from development partners will be crucial. Overall, Nepal is expected to have a net electricity surplus by 2025, and could export electricity to India and Bangla­de­sh to meet their global commitments and mitigate fossil fuel energy generation. To this end, discussions are under way with the Government of India for CBET and electricity banking.

Bhutan

Bhutan is primarily dependent on hy­dropower for electricity generation. Hy­dropower pl­a­ys a very crucial role in the country’s revenue generation. Over 99 per cent of the communities in the country have been electrified. Work is under way to electrify the remaining communities through de­c­entralised solar photovoltaic, and if successful, this can be re­plicated in other communities. In the cooking sector, although currently the co­untry is dependent on LPG in urban areas and firewood in rural areas, plans are in place to promote electric cooking appliances in urban areas and biogas in rural ones.

Bhutan’s hydropower plants are run-of-the-river projects. During lean months, the plants run short of their generation capacities and the country ends up importing electricity from India. Bhutan is cognisant of its reliance on a single source of electricity, and the governme­nt is focusing on diversifying into other energy sources, including solar and wind. Bhutan has over 12,000 MW of solar potential and close to 800 MW of wind potential. It also has power generation potential in the thermal, biomass and bioenergy segments. The government has charted out a plan to bring in over 200 MW of solar capacity by 2030, which will comprise both ground-mo­un­ted and rooftop solar. The ministry has also initiated amendments to existing policies to accelerate the development of alternative energy resources. Mo­reover, the ministry is working on a roadmap to produce green hydrogen as well as to transition to EVs. Bhutan re­ceives support from development partners in promoting its renewable energy sector, which is still at a nascent stage. A common power market may help en­ha­nce efficiencies and potentially cut electricity prices, thereby contributing to overall growth in South Asia.

Sri Lanka

Sri Lanka has set a target of generating 70 per cent of its electricity from renewable energy sources by 2030. At the COP26 summit, the country committed to cease building new coal-fired power pl­ants and achieve net zero carbon em­issions by 2050. To achieve its 2030 goals, the country will need to generate 30,000 GWh of energy; and to have re­newable energy account for 70 per cent, it will need to add almost 9,000 MW of renewable energy capacity. The­refore, rooftop, ground-mounted and floating solar, as well as onshore and offshore wind, will gain traction in the country, going forward. Challenges will lie in managing the intermittent renewable energy sour­ces, and controlling the grid to ma­intain the power quality and the stability of the power system. Sri Lanka is in dis­cus­sions with India to build a transmission line for trade of electricity. It is also in discussions with the Singapore government regarding power trading. Building a link with Singapore could, in the futu­re, help connect the country to Malaysia and Indonesia.

Conclusion

South Asian countries have abundant and varied sources of power generation. Bangladesh has natural gas, Bhu­tan and Nepal have hydropower, Sri La­n­ka has ab­undant solar and wind po­tential, and In­dia has a mix of all of th­ese. Today, electricity trade is taking place between Ne­p­al and India, Bhutan and India, and Ban­gladesh and India, and it is evolving further.

There is a need to enhance collaboration in the South Asian region. The co­untries en­tering into partnerships bas­ed on mutual respect and transparency could help advance regional cooperation and CBET. Trade can increase complementarity, improve availability of round-the-clock power and reduce cost in all of these countries, making it mu­tually beneficial. To this end, trading on electricity exchan­ge platforms would be particularly beneficial, as they allow electricity transactio­ns to take place at very little cost and provide clarity and transparency in transactions. Further, interconnecting the whole world thro­ugh the “One Sun, One World, One Grid” initiative will accelerate the cl­ean energy transition.

USAID recently initiated the South Asia Regional Energy Partnership (SAREP) programme, which can promote advan­c­ed technologies, create an enabling environment for private sector investment and strengthen utilities, specifically distribution companies, so that they can pro­vide improved service. SAREP has launched a partnership fund to support innovative business models that promote clean and renewable energy. The cost and efficiency of technologies with respect to clean and rene­wable energy are advancing tremen­dously. By working together, the region can harness its re­sources, be­come more efficient, drive eco­nomic growth in each of its countries, and redu­ce environmental costs.

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