Rajendra K Pachauri, Director General, TERI

It is essential that we bring about innovation. As far as energy is concerned, we need to move towards higher levels of efficiency. This means better transport, better buildings and better appliances. There is also a need to make changes in the kind of technology that defines each of these and that clearly is a business challenge. The other thing that needs to be globally understood is that we have to move to cleaner sources of energy, which means much greater use of renewable energy and perhaps shifting from coal to natural gas and from gas to renewable. A pathway has been established by which way business realizes which way it has to go in the future. The business sector clearly has an important role to play in defining the energy solutions. There are companies like Siemens and BP which have gone into renewable. A lot of new companies have come up in the renewable sector as well. A number of them are majorly small and medium sized companies and this trend has emerged across the world, including India. You have companies like Suzlon, Tata BP Solar and a number or others which are seeing renewable energy as an area of business activity.

There are challenges that these companies can meet individually like development of new technology, providing after sales services, educating the user and creating a sense of security regarding the use of these technologies; assuring him that they work to provide him a stable and secure supply of energy. More importantly, these companies need to interact with the government more because unless you have a framework of policies that enable renewable energy to be developed and used, there will be very slow progress in this direction. I am afraid that dialogue has not been carried out as it should. The government and the business sector really have to get together. If you look at other countries in the world, the major innovation that has happened has been done with a very clear understanding between the government and the industry. Japan is one, America is another; even Europe is similar. We still have a major divide between the government and the business sector. That needs to be bridged now.

That is precisely why I think policy and the involvement of other factors becomes very important. Take the case of switching from incandescent lamps to CFLs. The new types of bulbs cost much more and yet it was a very good business case. This means that you need to get financing at a reasonable rate of interest. The same thing can be done in the case of renewable energy. That is why I think government policy can act as a major incentive in bringing about movement in the right direction.

India can’t possibly ignore the fact that it has to do this. This is a country which is not just importing more and more fossil fuel, but also more and more coal. In order to ensure security and to see that this country is moving on the path to sustainable energy use, it is essential that we promote renewable energy. We have an abundance of sunshine and areas with very good wind speeds. The potential in India is enormous.

I think that initially we have to come up with high bid solutions and it is perfectly legitimate. For instance, we can use solar along with gas in some locations in Rajasthan. I think as the first step, this is the best way to minimize fossil fuel by partly using solar energy or other renewable forms.

The first thing that the government needs to do is doing away with subsidies on fossil fuel. Kerosene is heavily subsidized and a large part of it is used to adulterate other petroleum products. Electricity is subsidized for agriculture purposes. Doing away with these subsidies will give a level playing field to renewable energy. Second, you can provide incentives on the usage of renewable energy. For rooftop solar, the customer using energy can be incentivized, where as for wind farms, companies can be given the benefit. You also need to provide them with a reasonable price so that power can go into the grid and investments can be promoted. I think there is a whole mix of things that can be done to promote the renewable sector. Accelerated depreciation is one. Another is low rate of interest which can make this all viable. Finally, offering a price slightly higher than the cost of generation. There are various ways in which these incentives can be provided and these can be made time bound to jump start the investment, reach economies of scale and improvements in technology.