Powering India’s Future

For decades, energy security has been shaped by access to fossil fuels. But as clean energy technologies scale, that equation is changing. Today, renewables are increasingly being viewed not just as a decarbonization strategy, but as a way to reduce exposure to price volatility, strengthen resilience against geopolitical disruption, and build long-term energy independence. 
 
In the first episode of ‘Talking Energy’, Mr Bhupinder Bhalla, Former Secretary, Ministry of New and Renewable Energy, Government of India, and Jagjeet Sareen, Partner, India Head, and Climate Lead at Dalberg Advisors discuss how this shift is reshaping India's energy security strategy. Learn how India is building a globally competitive clean energy manufacturing base, leveraging its first-mover advantage in the green hydrogen space, and navigating the reliability of renewable power through storage, and managing import dependencies of renewable components.

Transcript

SPEAKER_00 0:04

We live in interesting times where geopolitics, geoeconomics, trade and industrial policies, wars and conflicts and climate crisis, supporting senior policymakers and politicians to fundamentally rethink India's energy security, energy transition, and more importantly, energy affordability. To discuss these issues and more, I am thrilled to host Mr. Bubindar Singh Bhala today, who served as Secretary Ministry of New and Renewable Energy Government of India. I had the distinct pleasure of working with him in shaping Bharat Climate Forum, a platform in making which would serve to foster conversations, Naj policy measures to make a Vik Seth Green and Atmanir Bur Bharat. With that, let me invite Mr. Bala before we delve deep into technical issues of energy security. Let's know you a bit better. Could you, for our audience, just walk us through your journey as a civil servant? And more importantly, what drew you to this national service?

SPEAKER_01 1:15

Hi, Sakeeb. Thank you for hosting me. It's a pleasure to join you here today. I'm very happy to see this new platform that you're building. And I'm glad that I have the opportunity to join you today. As far as I'm concerned, you know, I was never an aspirant for civil services initially. I did my commerce from Sri Dam College. I then went from an MBA to IM Bangalore. I worked in corporate finance for three years without having to think about government. But then over that three year corporate finance period in Delhi, I happened to hear a very eminent IS officer who had retired and who shared his experience of public service and how he helped contribute to nation building. And that actually really impressed me so much that I sat for the civil services examination at that point in time. And that's how I just got in. And it's been a very wonderful journey. I came in without any uh I I was probably I'm probably the first person in my family, entire family to join the government. Wow. And uh so I came in without knowing anything. But having traveled this long distance of 34 years in the civil service, I think it's been a pleasure and it was a privilege doing this uh you know, this journey and helping the people and the nation.

SPEAKER_00 2:45

So let's take that conversation forward on policy agenda. And you know, uh, from your perspective, having worked at the harms of the agenda shaping, uh how should India think about renewables from an energy security perspective rather than just a decarbonization strategy? Typically, when people talk about renewables, they will say, okay, these are NDC targets. You are into energy transition, but I think what we are seeing now is much more fundamental, where energy security could be underpinned by renewables. Uh, how do you think about it?

SPEAKER_01 3:19

Look at the India's energy basket. Let's start from there. I know electricity, as far as the total energy consumption, final energy consumption in India is concerned. You know, there are various ways of looking at energy. If you're looking at the energy consumption, electricity contributes to only about 19% of that consumption. So 80% plus is not electricity. Now, if you really want to decarbonize, you want to do something, we have to address this 80%. And this 80% is quite important.

SPEAKER_02 3:52

Yeah.

SPEAKER_01 3:52

It's something where you are very, very dependent on fossil fuels. Another perspective of the same consumption. As far as the source of who uses this energy is concerned, industry contributes to what 40, 40, 40, 42 percent of this consumption. Then you have the transport sector, 18 to 20 percent. Then you have the residential sector and so on and so forth. Now, if you really let's look at industry per se, only industry, just to give you another example. Industry, if you look at the biggest industries, what really which are the ones which actually use so much of energy? You have steel, you have cement, you have chemicals, petrochemicals, you have refineries, you have fertilizers. And they can't they actually use a lot of energy. Now, if the if they continue to use the energy the way they are doing, we will continue to be energy, we will continue to be very, very import dependent. Now, if they can electrify, for example, this is the simplest way of uh decarbonizing or uh you know reducing the dependence on uh imported fossil fuels. If you electrify these sectors, for example, in steel, can we have electric art furnaces? In in cement, can we have electric kilns? Can we have a different way of doing it? In refineries, can we use green hydrogen to instead of hydrogen in the crude processing? In fertilizer, can we make can we use hydrogen green ammonia to make fertilizers? If we do that, we will be reducing the dependence on fossil fuels, and since we largely import them, and therefore higher renewables in a sense will lead to higher energy security for the country. And that's something which is very important to look at when I mean so new renewables not only contribute, if you look in a very simple form, we say, oh, we are going to you know increase, we're going to achieve our NDC target, we're going to have a capacity which is more than 50%, 60%, whatever that number is, or can increase to. But the fact is, it's contributing to India's energy security in a very big way. And that is something which needs to be underlined.

SPEAKER_00 6:09

True. Um, so what I hear you saying, uh, Mr. Balai, is that we need to expedite our efforts to electrify all sectors of economy and green that electricity.

SPEAKER_01 6:20

Electrify to the extent the sector can be electrified. Of course. For these sectors which cannot be electrified, and that's you know, since it's called hard-to-obed sectors, then you use different ways of programming. Green molecule. You use green molecules, you use another way.

SPEAKER_02 6:35

Yeah.

SPEAKER_01 6:35

So essentially you green either the electricity or another sector so that you uh are not that dependent.

SPEAKER_00 6:44

Now uh that that's a uh kind of a fundamentally different framing than where we are in terms of carrying the political economy of a petrol state, mostly import dependent. Um, but when we look across the globe, I think most of the emerging economies, uh, except for the United States, are moving towards electrification in a rapid pace. And as you're rightly saying, that would reduce the import dependence, but also bring industrial efficiencies. You know, we will become much more competitive as we go. That brings me uh to this wider perception among uh non-energy monks who still believe that you know solar, wind are not very reliable sources of energy. Uh, even though we have made advances in storage, we have made advances in how we manage the grid. Uh but if we look at the data, the the grid is unable to absorb. Um, you know, we have almost zero uh solar electricity prices at the trading in energy markets. We have this infamous duck cover. When we need it, we don't have it, when we have it, we don't need it. Um what is your view? How we should manage the issues of curtailment, not just deployment, but use of renewable energy uh as we think about ramping up electrification and use of renewables?

SPEAKER_01 8:07

So when we started, we were trying to ramp up RE. That was our main ambition. Because we were hardly anywhere and we needed a lot. So we said, okay, we must ramp up our RE capacity significantly year on year. That's how we came up with a 500, you know, the Honorable Prime Minister came up with a you know 100 gigawatt target away back more than 10 years ago, and then gradually increased it to a 500 gigawatt of non-fossil energy target. But the fact is, initially at the smaller capacities, we could easily integrate it in our grid. Yes. Because the number was so small that it was a fraction of what the uh other energy was, non-re was. However, as we started ramping up, we started to witness the integration issues which every RE around the world creates in a grid. RE is variable. You know, as you yourself said, yeah, in the daytime we have so much of solar. However, in the evening we have none. Wind happens depending on the wind speed. It could be early in the morning, it could be evening, it could be night, it depends on when it is. It depends on the seasons as well. So RE is highly variable. What the consumer wants, what the industry wants is stable power. They cannot afford even 0.01 industry, for example, the continuous process industry cannot afford a 0.01 shortfall when it is running uh at full stream. Therefore, what they need is firm power. So the only way we can become more, the RE can become more palatable to the grid, and especially when it is expanding, is if the RE's nature is changed from variable RE in a sense to firm RE. So a lot of steps have been taken in this regard, and then the easiest way is to add storage. True. The first method we tried was hybrid. So we added wind to solar. Yeah. So it kind of stabilized the output, and therefore that became a hybrid model. Then we realized that sometimes there's no solar, but there's no wind either, wind suddenly drops because of whatever reason. You can't have zero power. So then now we need to have storage. So if you have a combination, so we've now come up with a you know, you must have heard about firm power.

SPEAKER_00 10:36

Yeah.

SPEAKER_01 10:36

We have FDRE tenders which are you know carried out by SECI and other agencies. This is firm and dispatchable power. Here, what we say is we want this much of power, we want so much megawatt or so much of gigawatt of power. At this confidence level, we want it for so much time, like 99% of the time. The peak power I needed two hours in the two, two hours of four hours of peak, peak power I need in addition, I need it for so much. So we we've created this new different ways of looking at creating packets of firm power, packages of firm power, which we feel is now uh you know easier for the grid to take, much easier for the consumer to absorb. That's what they want. But we still haven't reached the absolute firm power that thermal, for example, provides. Firm power that nuclear provides. So, in it, now we need to rework our uh our packages, our RE plants, our RE auctions that we conduct, the kind of uh you know scale that we want. We have to gradually move from variable REM to almost firm RE, whichever model it may be.

SPEAKER_00 12:01

You know, as wise people would say, never let a crisis go. Uh uh crises are always opportunities, and to my mind, now is the opportunity to launch a mission mode on storage, you know, maybe a national mission. Uh we have been tiptoeing, you know, spread across various ministries from MHI to power to M and R E. Maybe now is the time to go full hog, and that would maybe fundamentally shift the way people perceive the variability of renewables. Uh that brings me uh um to uh another kind of incoming dependency, which we may be building as we uh ramp up RE. You know, uh you've been on the governing board of Bioclimate Forum, where we are analyzing this issue of import dependency of components. Uh, as numbers would suggest, um, about 70 to 80 percent of the components of solar are imported. Uh, in wind, about 50%, in storage, 70 to 80, uh, and list goes and on and on. And then in HVDC, we don't manufacture a single gig. Uh, that means most of the economic value is exported. We are just deploying power, but the real money is going out. It's not leading to economic development in India, it's not leading to green jobs. But more worrying is like today, fossil fuel dependency, tomorrow it's going to be important of component dependency. We saw what happens to the rare earth magnets. Uh, we saw what happened with the visa delays of technicians and XYZ. You know, you you were at MNRE at some point in time when this happened. Uh, so give us uh your take. Uh, you know, um are we jumping from uh you know from a rock to a hard place now?

SPEAKER_01 13:46

The fact is that first is whether we want to jump or not. I think the the the I think one must be uh one must note it and I think it's acknowledged we must move to higher manufacturing in India. There's no there's no doubt about it. As we are ramping up, we added 54 gigawatt of RE last year, uh which is a record. Uh and you know, last previous year we had only done 30. And you know, we we always always said that we need about 50 gigawatt every year to reach the 500 gigawatt target, and now we are on track. But the fact is, if you don't manufacture in India, so then you run into supply chain dependence, uh, as you may yourself have given the numbers. So to get over that, I mean we may be manufacturing modules. Now we have 200 gigawatt of module capacity in India. But if most of the sales are coming from abroad, and the cells are of course, you know, upstream, then everything else is coming from abroad, it's all imported. So obviously, we are not, we're only adding some value while consuming in India. So we need to get over that. And so supply chain uh resilience has to come in as far as India is concerned, and therefore, I think the way you move forward is you not only focus at the end product, yeah, but also ensure that you have supply chain resilience in the upstream components, material, processing, everything else. I mean, you can't just say this is Indian module is Indian and therefore I'm happy. No. It cannot happen. And the second aspect is, for example, you know, we the import dependency has also created the issue of price vulnerability, price volatility.

SPEAKER_02 15:41

Absolutely.

SPEAKER_01 15:41

I mean, if you have domestic industry, then you are less vulnerable. You will be able to, you will not be that impacted by you know change in prices. You see the current uh, you know, the crisis in the world, geopolitical, and the prices are all going highway. We really don't know, there's no stability in the prices, and therefore, people, I mean, companies, industry looks at the long term. They cannot, if they have to make investments, you want a 10-year, 20-year perspective. True. You can't say you know, three years, next three years is going to be very good, and therefore I should invest $100 million. True. That cannot happen. And therefore, and similar for I think for the in for the economy as per se, we have to ensure that we get away from the import dependence in the supply chain in all sectors, especially related to energy. True. And so we have to dissect each of them: solar, wind, battery, electrolyzers, and whichever. All clean tech products. And then and then you know go component-wise and you know, break it down into small, small parts and ensure that everything happens.

SPEAKER_00 16:57

Again, I would say this is the time where the government of India should double down on manufacturing push. We have the announcement of the national manufacturing mission and the budget uh a year uh ago, and uh we've been waiting the big unveilment of the mission. But I think now is the time if uh nobody else, you know, on fossil fuel, somebody could hide behind. We we don't have the results underneath, but here we can manufacture, you know, uh, and we have the industrial base, I think, which can ramp up, as you rightly said, but it will take a concerted push uh at a component level, how the industry comes about. And more importantly, as you rightly said, with long-term planning, it can't be a horizon of two to three years, you have to get a little longer. That brings me uh uh to the point on our first mover advantage on maybe newish technology. Uh, in your introductory remarks, you talked about national hydrogen mission. Um, while hydrogen uh is not a new technology, but the use we see and the scale we see for the purposes uh hard to abate and otherwise and even in transport, this is new. Uh the last tender was a remarkable success globally. Uh so give us again your take uh on green hydrogen, India opportunity, and can we drive this hydrogen bus?

SPEAKER_01 18:17

I think we we started uh uh at the right time.

SPEAKER_00 18:21

Right?

SPEAKER_01 18:21

We are among the first few nations to travel this road. So, unlike many other sectors, many other technologies where we started a little later than the others. And some of them we started only Tao, whereas many countries have been there for many years. Green hydrogen is something that we started on time. So, therefore, I think I would say that we have one of the first early mover advantages. We are one of the countries having that. But, and how do we how are we going to achieve that? One, India has the capability to produce green hydrogen at the lowest price. That automatically, thanks to our renewable energy success, thanks to the scale, thanks to our cost of renewable energy, one of the lowest in the world, kind of national grid we have, kind of uh you know uh low risk we have as far as RE projects are concerned, this automatically gives us the advantage of venturing into green hydrogen. Just to give you an example, 70 about 65 to 70 percent of the green hydrogen cost is the energy cost, is the renewable energy cost. So, and since we are masters at RE, which is acknowledged, many countries are learning from us. We can excel in it. And balance 30%, yes, there is a cost. So we need that, and then technology comes in. We are you know National Green Hydrogen Mission is also a very comprehensive document. It's a very comprehensive, one of the very comprehensive policies that India has issued, and it is acknowledged as one of the leading policies on hydrogen in the world. We have had the we are taking care of the whole ecosystem, production, manufacturing, standards, safety, skilling, uh, coordination. Uh it's like a joint effort. We have, of course, given you know, we use our incentive schemes. Uh we had about $2 billion worth of uh you know overall mission uh you know uh budget, 2.1 billion. Out of which 1.7 billion is incentives, and we have earmarked almost 60%, 70% of the incentives already, both for green hydrogen production and for electrolyzer manufacturing. And we have other we have come out with variations of using them. How do we you know create more vehicles of using incentives? For example, we have we have created a vehicle for the fertilizer industry, we have created a package for the refineries of a different kind of incentive scheme where incentive is built in and the and the production happens at the refinery, or green ammonia is aggregated by SECI and provided to fertilizer industry with the incentive built in. So we have sort of we have created these new vehicles, very innovative approaches of uh incentivizing production, incentivizing manufacturing and for consumption in within India. So that's something that I think has been very, very satisfying for you know as far as India is concerned. Uh many some of the manufacturing facilities are electrolyzer manufacturing facilities are ready, others are still in the process. I think now we've gotten to the point where demand has become very important. Unfortunately, green hydrogen kind of paused a bit. People were wondering whether it's the right product at the right time. So they think maybe it's it's it's it's its value is a little, you know, a couple of years later, not now. So to that extent, our export markets have not turned out the way we thought they would. But however, now we have I mean you still have some off-take agreements which have happened. Sure. Uh Green Co is there, Racme is there, and some other companies are there. But I think that we have we have to focus on the domestic demand and using the fertilizer uh industry, yeah, Indian refining industry, and both of them together actually consume about about uh half a million, no about five million tons of uh hydrogen annually. True. So if we are if we can divert even 20-30% of that demand to green hydrogen, yeah, you know, the way we plan to, I think that will create a domestic market for green hydrogen.

SPEAKER_00 22:51

Over the last half an hour, we we looked at our experience of RE, how it could be scaled up, few fundamental things which could be expedited now, including storage, uh, so that it becomes more firm than what is perceived. And by that, uh, we could start making a fundamental shift in our energy basket, in our electrification efforts, and more importantly, our vulnerabilities, our dependencies, while managing uh in the manufacturing agenda so that we we don't jump from one vulnerability to the other. Uh, but you know, uh somebody um once jokingly told me, you know, we we can't dig up oil because we may not have it, but our sun is shining. Uh so let's let's tap on that. Uh as we close this uh fascinating conversation, uh Mr. Bala, just give me one sentence uh um for our uh audience um to to kind of underline this fact that renewables could help us fundamentally shift the way we we look at energy security of India.

SPEAKER_01 23:56

I think we've been looking at renewables only from the electricity capacity point of view. We've been looking at it helping in generation of electricity till now. I think we have to move now towards recognizing its importance as far as energy security is concerned. And I think in the last few months, this has been brought kind of this topic has been thrust up the ladder as as one could say. Yeah, and uh is become a topic which everybody's talking, you know, everybody wants is noticing. And it's not only renewables, I'm saying we are looking at every aspect of making India secure from the from from from the improving the resilience of the country.

SPEAKER_00 24:47

So At Nir Bhartha in in our energy uh production, consumption, transmission, everything uh which we talked about. Now, this has been a fascinating conversation. I've certainly learned a lot. Thank you very much.

SPEAKER_01 24:59

It has been a pleasure.