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Germany’s Transition To Renewables, What Can India Pick Up?

A developing economy like India, though mainly agriculture based, can take lessons from success as well as failures of other countries, while executing its own energy agenda.

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India is sprinting towards renewable energy as bankable source for the near future. As per a paper published by NITI Ayog, India aims to achieve 175 gigawatts (GW) of its energy from renewables by 2022. Prime Minister, Narendra Modi reaffirmed India’s goal to achieve this target during U.N. New York Climate Week in September 2020. To achieve this goal, India must tread its paths carefully and take all the right steps.

There is an English idiom, “to learn by osmosis”, a strategy India must adopt to accelerate its transition to renewables. In this light, other emerging economies serve as a good example on what to do right, as well as mistakes to avoid. This will better enable the recent government target of 450 GW renewable energy by 2030. India is presently encouraging public sector as well as private players to invest heavily in the renewable segment. Ministry of New and Renewable Energy (MNRE) says we have 100% FDI (Foreign Direct Investment) in renewable energy. However, we need to do some more homework to realise the clean energy and renewable potential.

Regarding India’s goals, we have a long list of lessons from Germany’s transition to renewables which are noteworthy:

· Power sector is decentralised to locals and communities. With growing number of townships and gated communities, it would do well to heed this model. India is also focusing on rooftop solar power and is the third-biggest solar market in the world, after China and USA, and aiming to increase its solar capacity to 100 GW by 2022. Localisation of administration can be a viable alternative to look into, as against centralisation. The power sector in Germany is thus citizen centric. According to Renewable Energies Agency (a communication platform funded by a group of 100 companies), citizens presently own a staggering one-third of Germany's renewable energy capacity!

· Germany also encourages and promotes energy entrepreneurship extensively. Since the energy transition set off in 2000, tens of thousands of citizens in the country have turned into electricity entrepreneurs, installing solar panels on their house rooftops, to investing in shares of the wind turbines. They are also encouraging people to form small cooperatives in favour of energy transition from conventional fuels to renewables one. In India, we already have the culture of cooperative societies, especially in the agriculture and allied sectors.

· The Germans also have a head-start in energy storage, except for hydro power. Germany is investing in techniques where excess renewable energy is used to make methane and Carbon- di-oxide (CO2) from water which is to be stored for future use. Technology transfer and technical expertise would aid development in this sector.

· The German economy works on incentivisation for and from the common man. Subsidies granted to wind and solar power in Germany are charged through a surcharge on consumer bills, and this has increased over time, to the extent that it now constitutes around 20% of the price consumers pay for their electricity. Despite this issue, German system continues to flourish in their energy transition goals. One reason for this is the extent to which people are benefitting from the expansion in renewables. The supplement citizens pay through their bills is later paid back through their investment returns. Thus, move to renewables is widely acknowledged as a major driver of economic development. As per, over 400,000 German jobs are now supported by the sector. They have an entire ecosystem in place of incentives and taxation in place, which are ultimately profitable for the consumer.

· As per Germany’s Federal Ministry of Economic Affairs and Energy, by 2025, 45% of electricity consumed in Germany will be derived from renewables. In the Indian context, the 2018 National Electricity Plan sets India on a similarly ambitious trajectory of sourcing 275 GW renewable energy by 2027. Also, according to Mercom India (a leading clean energy market tracker), India has reached 20 GW cumulative solar capacity, achieving the milestone four years ahead of the 2022 target which was first stated in the National Solar Mission in 2009. In 2015, the target for 2022 was raised to 100 GW. As promising as these goals are, India is yet to really tap into the private sector and individual enterprise to best deliver (and fund) a rapid roll-out of this distributed energy solution that has proven so successful in Germany.

It is also noteworthy that Germany has expanded on the international front, including collaborations with the Indian government. The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) is executing the agreed-on Indo-German Energy Programme on behalf of the German government. It liaises with the KfW Development Bank, which is a German state-owned development bank and works with its Indian partners. This energy programme seeks to promote measures which improve energy efficiency and integrate it with renewable energy.

This agreement focuses on development of the Energy Conservation Building Code for multi-storey residential building. This makes upcoming buildings environment friendly in their energy usage. Other developments include large-scale, grid level integration of renewable energies, along with Green Energy Corridor, as well as photovoltaic roof systems. This will help achieve India’s renewable targets, which as per NITI Ayog, is to generate 450 GW of renewable energy by 2030.

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The above graph shows, at 82.6 GW of installed renewable capacity (as of September 2019), India is about halfway to meeting its 2022 target. However, there are existing challenges in this area, namely heavy import duties on solar panels, land allotment and land fragmentation issues, unsatisfactory development of electricity evacuation infrastructure, and uncertainty of power purchase agreements, along policy regulation. However, despite the existing pandemic and drawbacks, India is constructing around 31 GW of renewable capacity, which is under construction, and another 39 GW likely to be constructed in 2021. If we take the numbers based on these projects, it is likely that India’s goal of 175 GW by 2022 may be extended. One way to fill this gap is to learn from others’ mistakes and successes, especially other countries.

Germany is highly industrialised, and one of the fastest growing economies in the world. A developing economy like India, though mainly agriculture based, can take lessons from success as well as failures of other countries, while executing its own energy agenda.