Don’t get dewy-eyed on renewables: CEA

Raising questions over the current method of costing for renewable energy, Arvind Subramnian, the government's chief economic advisor (CEA), said bidding was not the best way of finding this in India. At the same time, he warned against India falling in the trap of ‘coal imperialism’ being imposed by developed nations. He said it should continue to invest in coal as the base load till 2030.

Speaking at the Darbari Seth Memorial Lecture, the CEA laid down 10 propositions to balance the renewable versus fossil fuel market dynamics. “Coal is both the source of livelihoods for millions and the locus of many communities But, coal is also the source of several development pathologies—corruption, crime, mafias, Maoist insurrection—captured in the term the “resource curse”. So, the rise of renewables poses both a threat to those livelihoods and communities but it may also afford an opportunity to escape from the attendant pathologies,” he said.

He said the intermittency of renewable energy, land cost, building a grid for it and, most important, the cost of displacing coal needed to be accounted in the cost of renewable energy. “We must be abundantly cautious about claims on behalf of renewables. Properly costed, renewables will achieve true parity (in social terms) with coal only in the future.”

He added that proper estimates of the full costs of renewables are still elusive. “One thing is clear. The recent prices bid at solar auctions in India are not a true reflection of the true cost, both because of the plethora of subsidies available and because there has been strategic under-bidding in the reverse auctions, as in coal and telecommunications. In fact, there is an important lesson here for renewables, to avoid the experience of thermal power in creating excess capacity,” said the CEA.

“Under any plausible scenario, coal will provide about 60% of India’s power needs until 2030”