January 23, 2018

Speaking on ‘Strategic Outlook: Energy Systems’ at WEF in Davos, Switzerland

Q: Minister Goyal, let me get you to come in here as Rachael says, we have seen the prices of renewables coming down dramatically, and solar in particular, down 70% from 2010 to date. Your thoughts on this somewhat controversial issue, international trade and climate change, all lumping together?

A: Well, I think India’s own thinking in the earlier years was quite different in terms of our ability to ramp up renewables, the pricing of renewables, and also the fact that India was never responsible for this problem in the first place. After Prime Minister Modi came in, particularly, during the discussions in Paris, at COP21, I think the dimension completely changed. India took a leadership role in promoting renewables in addressing the serious challenge of climate change. And instead of becoming an obstruction to the global effort, which somehow over the years had become the flavor, I think India has adopted renewable energy very rapidly. If you take solar energy alone, we have grown by about 6 times in the last three and a half years, and our plan is to go up to a 100 GW by 2022.

Effectively, giving a huge demand push, which encourages new technology, which encourages competitive pricing, and irrespective of its impact on the cost of energy, India has chosen to go down the path of clean energy. We have chosen that we will be a part of the global effort to promote serious-serious action on energy conservation, on addressing the challenge of climate change. And that path is irreversible as far as India is concerned, irrespective of what other countries may do.

Q: Minister Goyal, if we can come to you and back to that issue of policy, I think another element if I can bring into the conversation and has already been thrown forward to is that it’s not just the power sector that needs to transform, we are talking here about transportation, specifically, shipping. We are talking about the trucking industry which has to be hard hit from a regulatory perspective potentially to create that change. Let’s get your thoughts on it?

A: Well, when it comes to policy and pricing, India was amongst the first country to put a 40% tax on our cost of coal. So, about 2 years back, 3 years back, our coal going to the power plants was costing about $15-16 and our tax on that coal was about $6. So, in terms of policy, I think governments will have to be proactive to dissuade somewhat the fossil fuel generating sources of energy.

Oil and gas certainly will have its role to play. We in India are large importers of oil and gas, so for us, there is a added incentive to disincentivise petroleum products. And, therefore, we have a huge taxation on petroleum products, also because we do not want runaway consumption of petrol and diesel, also of gas.

At the same time, the important thing that was mentioned and brought on the table about electric vehicles, I think one has to look more holistically at the electric vehicle story. Of course, most of the west, everybody owns their own vehicle, so you are looking at replacement. Countries like India, which are still emerging, you would have 80% of our population which does not own a vehicle as yet, and we would love them to have a first vehicle which is electric. So, in some sense, we are not duplicating investments, first into the petroleum driven vehicles and then into electric vehicles.

Also, as he rightly said, it provides a natural hedge in terms of storage. And, what was just mentioned about the source of generation, then you can actually have power being generated from intermittent sources of energy like wind or solar. And without having to spend on storage, you can actually spend straightaway on storing it in the battery which goes into the car. And in the long run, look at swappable batteries. That’s the kind of policy framework we in India are trying to do.

Q: The battery technology has got to lead the charge on this one?

A: Yes! The battery will store the energy, generated at different times of the day and that will be swapped into the car, into the vehicle as in when it runs out, the old batteries, just swap with the new one and the old battery will then be charged whenever the renewable sources come on stream. So, one of the biggest challenges for all policymakers is the fact that we need 24/7 power, and we are not going to have candle light dinner in Davos.

So, therefore, end of the day, countries like India will have to dependent on coal, we can’t feed renewable energy into a grid. It doesn’t have energy flowing in it 24/7. So, in that sense, there will have to be a balance. We will have to look at energy efficiency in a bigger way to bring down consumption, and whatever consumption is there how can that be more efficiently managed through the time of day, so that the dependence on fossil fuel based energy is reduced. And policy can make a huge impact on that.

Q: Minister Goyal, solutions in the space in terms of encouraging that investment into clean cooking energy?

A: We in India had a very-very serious challenge, almost a 100 billion families, which were cooking through traditional means, literally having firewood come in and cook or using even coal sometimes. And that was almost reaching a crisis proportion in terms of the carbon that that created in the atmosphere.

We embarked about 3 years ago on a huge programme to take LPG to each of these families. We have done about 35 million in the last 3 years, in the next one year we will do another 15 million, and in the next 2 or 3 years after that, we will make sure that there will be no family in the country which has to use that traditional form of cooking.

But we have not rested on that. That’s only an intermediate solution. I am glad Rachael talked about it, because only last night, Prime Minister Modi while talking to business leaders touched on this subject that ideally he would like to go to the next level now. And we must look at what we can do with clean energy or renewables, and create cooking solutions.

Right now in India, we have been doing a little bit of innovation using very-very simple technologies, using the sun and trying to cook, maybe Maggie noodles or stuff like that, but then that’s just the beginning. The idea is that we will ultimately have to take clean energy and electric induction heating into every home for cooking purposes. And that means the ramp up for heat will have to be really fast. So, it’s I think a challenge for all of technology experts, but clearly that will have to be addressed, both in the African continent, large parts of Asia and maybe some parts of South America where this can become a very-very humongous problem in the years to come.

Audience questions

Q: And then I think if we can open up to all of the other members of the panel on massing the capital to deploy technology to create that efficiency effectively which cancelled our problems, Minister Goyal?

A: Well, I can share a very good example we have had in India, which will actually answer the question best. Personally, I believe energy efficiency is a absolute profit-making game, there is no cost associated. We have been using these incandescent bulbs for lighting in India for God knows how many years. And way back in 2015, we embarked on probably the world’s largest campaign to replace all lighting by LEDs. And I remember, the government used to procure LED bulbs at that time at about $6, and at all costs and taxes and marketing cost, and then subsidize it to make it viable proposition for the people.

We decided on leveraging on economies of scale, huge amount of transparency in procurement and we set a target to replace 700 million bulbs with LEDs in a span of 4 years. I am delighted to share with you that it’s not even 3 years, actually, 5th January, 2015. So we have just completed 3 years two weeks ago of that programme. We have replaced 800 million bulbs with LEDs in the country and the price has fallen by 87%.

I mean I go to many parts of the world, and Power Ministers, Energy Ministers thank me for India’s contribution to bring down the prices quite easily.

Q: Price down 87%?

A: 87% down! So today, and by the way, I bought 50 million LED bulbs from Philips – I don’t know whether it’s improper to say that, but it’s public knowledge – at 60 cents a bulb, which was earlier at nearly $6, 60 cents a bulb. The lumination was 30% more, instead of 7 W it was 9 W. And the revolution that we have created because of that, we have reduced our carbon dioxide emissions by 112 billion tonnes annually. We have been able to avoid 20 GW of capacity, because lighting is usually in peak hours. And the saving to the consumer, directly to Indian consumers, is $6 billion every year. And what did that cost us, these 800 million bulbs? Less than $1 billion!

Q: We have got 10 minutes between the panelists. I want you to leave our audience, both here and across the African continent, and of course, those via web watching this broadcast, with the key elements as you deem them appropriate for the discussion on energy systems as we go forward for the next couple of days. This is your time to shape the conversation. You are passionate (inaudible)?

A: Well, taking a cue from the discussion earlier about a world by 2050, which is 100% clean energy, my own sense is it fits in very well with the theme of Davos this year – A shared prosperity in a fractured world. If one was to look at energy consumption patterns, instead of taking the country as a unit, but taking the world as a unit and transmission costs have over the years come down. They are more affordable now. You have transatlantic and trans-ocean transmission lines coming up. You have wind being generated at different places all over the world at different times of the day, solar being generated at different times of the day.

If one was to imagine, and I don’t think it should take us 32 years to get together. One can really, if we all put our combined might together and work like we did in Paris, where the 195 nations really collaborated in that effort, everybody brought in their INDCs on the table, save and except, a few most are working towards achieving that. If we were to look at the world as a grid, and in some small sense, we in India successfully experimented with One Nation-One Grid in the last few years.

And, therefore, I can say with some sense of background that if we were to look at the world as one grid and look at transporting or transferring power to demand areas at different times of the day, we could actually transition much faster to a low-cost future for energy, for a future where you could look at 24/7 clean energy powering the world.

And I think, as Pedro rightly said, innovation, technology won’t take that long once the dimension is set that despite all the issues where we have a fractured world at least on addressing the concerns of climate change, we are one, we are going to share our technologies, we are going to work together as one family and ensure a bright future for the next generation.

Q: I like that that ‘looking at the world as one grid’ when it comes to energy systems. We are one.



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