What beyond 2020 in the Renewable Energy Sector? When looking beyond the year 2020, we should seriously consider the likelihood of a substantial increase in demand

By R. Somasundaram

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.


Soothsaying, in general, is fraught with risk— and predicting the future in an emerging sector, more so. Examples of missteps, even by experts, abound. The highly publicised study in 1980 by McKinsey for AT&T regarding the future of the mobile phone business is a case in point. McKinsey predicted that by the year 2000 there would be about 900,000 cell phone subscribers in the US. The actual number turned out to be 109 million. AT&T, whose unit Bell Labs had invented mobile telephony, lost out to competitors and had to acquire McCaw Cellular for USD 12.6 billion to enter the market belatedly.

What Makes Predictions so Difficult?

Two factors come to mind. First, the proclivity for forecasting the future by extrapolating the past without accounting for the changes in ground reality. Second, the human brain is wired to think in linear terms so that when we hear – "fast-growing industry' we think, at best, of high double-digit percentage growth instead of growth by many multiples within a given year, something the well-accepted "S-Curve'!

Given this context, we can look at what lies beyond 2020 in a couple of different ways.

Let us start with a view through the lens of history, specifically the JNNSM 2020 target of 20GW of solar power. When this was announced in 2010, India had a much smaller solar energy footprint. The announcement was seen as wishful thinking. However, we have already exceeded that target, and with two years to spare.

So, when looking beyond the year 2020, we should seriously consider the likelihood of a substantial increase in demand. India is said to be in a power surplus situation already but this surplus is based on a low per-capita consumption figure of 1010 kWh which will only go up as the country continues to develop. This, in turn, will drive new capacity development.

Staying on the demand side, we are likely to see the emergence of some substantial use cases, which are at best marginal now. A key one is a transportation, i.e., electric mobility. Domestic use cases include some which are already common in developed areas (e.g. lighting, domestic appliances) but may become more widespread and those which are currently rare but may be adopted widely over time (electric cooktops).

So, in relation to these use cases, one could see a two-step process: step one involving a transition to an electricity-based use case and step two involving the generation of that electricity from RE sources.

Problem of Storage

Storage is likely to play an important role in the broad-based adoption of renewable power since it addresses the key stated shortcoming of renewable power i.e., intermittency whether in seasonal, diurnal or other temporal terms. However, battery prices will need to come down substantially before we get to that point. While opinions vary on exactly when this will happen, people are largely aligned in the view that it is but a matter of time.

When talking about the power sector, we need also to consider transmission and distribution. India's T&D infrastructure has its share of issues; however, perversely, lower dependence on legacy systems can be a blessing since it allows for the faster adoption of new and dispersed generation models. We have already seen this with mobile telephony where India leapfrogged generations of technology since it didn't have much of an infrastructure, to begin with.

Renewable Energy Today and in the Future

So, on to a bit of math. Currently, we have about 70GW renewable in a total installed capacity of around 340 GW. If India continues its development trajectory to become the second largest economy by 2050, it isn't unrealistic to assume a three-fold increase in per capita consumption and a commensurate increase in installed capacity.

Next, additional use cases for electricity come up, they could provide a 2x-3x increase in requirement. Finally, since load factors for renewable sources are lower than for conventional energy sources, if a substantial part of new capacity must come from renewable sources, the capacity being installed will have to be higher.

Taking all this into account, installed capacity is likely to go up more than five-fold with a substantial portion coming from renewable sources. We can argue about the numbers, but the big picture remains unchanged. RE is an idea whose time has come, and market forces will find a way to work through these issues so that RE will continue to remain an area of robust growth well beyond 2020.

Wavy Line
R. Somasundaram

Head, Strategic Initiatives, Mytrah Energy.

R. Somasundaram is the Head of Strategic Initiatives at Mytrah Energy where he has firm wide oversight for several areas including Corporate Communications, Learning & Development, Campus Relations, and the Mytrah grants program. Somasundaram has functional experience in business development, finance and strategy across the financial services, insurance, automotive and consumer goods sectors. He has worked with organizations like Credit Suisse, General Motors, Luxottica and HSBC, primarily out of India and USA, on assignments for businesses / clients in Asia, North and South America, and Europe.

Somasundaram has an MBA from the University of Michigan's Ross School of Business, a PGDM from the Indian Institute of Management, Ahmedabad, and a BE degree from Jadavpur University.


Related Topics

News and Trends

RBI Asks Indian Banks To Prepare For the Future With AI and Blockchain

The Deputy Governor further adds that the future of banking will be shaped by the advancement in technology, leading to greater automation in business and processes, understanding the changing customer expectations, and being at par with the evolving regulatory scenarios.

Thought Leaders

What Entrepeneurs Could Learn From Trying to Write Poetry

Find a work rhythm that enhances productivity and pleasure.

News and Trends

Togai Raises $3.1 Million Seed Funding

The funds will be used for product development and expanding into new geographies

Growing a Business

How to Harness the Power of Data Analytics for Business Growth

To thrive in the competitive landscape, entrepreneurs must understand and leverage the power of data analytics.

News and Trends

Luxury Cars: Need For Speed In Tier II, Tier III Cities

Companies such as BMW, Mercedes-Benz, Audi, Lexus, Lamborghini and others see potential in emerging markets of Tier II and Tier III cities. Ludhiana, Udaipur, Kanpur, Mysore, among others, where there are high numbers of NRIs and HNIs have seen high penetration of luxury cars