‘India is a country that has been blessed with a vast abundance of not just resources but with a massive landmass and high insolation, which can be exploited in terms of solar energy to quell our woes once and for all.’

Everyone has heard this or some alternative of the above statement at least once in their lifetime, and although it is a calming thought to think that rising fuel prices won’t be a thing of the future, is it really something that is actively taking place?

Let’s take a look at how alternative energy sources have become the talk of the town and lead the line for sustainability measures in our country along with analysis of stocks of companies dealing with alternative and sustainable energy.

India is already the 3^rd largest consumer with a peak energy demand of 223 gigawatts (GW), most of which is satiated by coal based thermal energy. The total installed capacity however is 417.66 GW, which is an interesting observation as one would expect that this should be more than enough to fulfil our needs. This is not the case because-

1. The power grid is weak, which leads to both energy losses as well as increased costs on both the production and consumption end. India for one loses around 19% of energy in electricity transmission loss due to a weaker power grid.
2. Frequent power outages caused by weaker gridlines become very hard to repair and consumes a noticeable amount of energy while using black start generators (diesel powered or otherwise) to bring the grid back online.

Out of this 417.66 GW of installed capacity, the share of installed capacity of alternative energy amounts to around 125.69 GW. This amounts to around a quarter of the capacity, but a lot of it is not utilised to the fullest due to environmental factors which don’t allow sources such as solar, wind, hydel and others to function throughout the day and year. Having a weak grid hinders operations for alternative energy sources a lot as they require continuous connectivity due to complications that arise with storage of energy from these sources.

Let’s take a look at a more specific analysis of a few alternative energy sources.

Wind Energy

The most obvious and ‘visible’ source of alternative energy that one can sometimes see while driving on a highway are windmills, which converts wind power into electricity using the rotation of its twisted bladed (so as to aid clockwise rotational movement), which is attached to a nacelle which houses a gear box and generator within, thus utilising electromagnetic induction to produce electricity.

Moving on from the jargon, the main topic of focus is the energy output, and India has massively upgraded its output capacity, which reached a high of 44.96 GW in 2022 (out of a total  potential of 695.5 GW). This is more than double the 2014 capacity of 21 GW, displaying an upward trend as seen in the given graph. Along with this, the cost of setting up wind energy is also falling every year, so it should aid in increasing the output efficiently.

Even with these levels of growth, we still  haven’t optimised the reach of wind energy because of factors such as lack of availability of even land, logistics issues due to fragility and size of components, lack of easy access to viable locations for setting up wind farms, weaker energy grids and so on. One process which tries to combat this issue focuses on increasing output of existing turbines with lower heights by repowering and refurbishing them which also extends their life. This however again has issues as the cost of refurbishing existing turbines is around the same as creating a new wind farm, and thus this policy is not as viable as it seems.

Solar Energy

Moving on, let’s look at the scope of solar energy in India. Having around 300-330 sunny days in an year, and a potential output of 5000 trillion (yes, trillion) kWh. Even though it is not completely utilisable due to the varied terrain and climatic conditions across the face of our country, the potential insolation is still more than 5.5 kWh/m² on average (highest daily average was 7.5 kWh/m²) for most of India (except the North-Eastern states, where the average was still >4 kWh/m²) during the summers. All this amounts to the share of solar energy being around 13.2% of the total energy output for our nation.

The main reason that utilization of this particular aspect of alternative energy is of paramount importance for India is it’s wide availability, and with a noticeable chunk of landmasses in large states being either barren or unculturable, it provides an actual use for such land across the nation. Although the share may not seem very significant, the combined barren/unculturable land from the sample states amounts to 13,883 ha, which can generate a whopping (potential) 763.57 GW during the summers (taking 5.5 kW/m² as the average). The following graph visualises this potential output and puts into perspective how much of these small contributions can contribute towards optimising solar energy.

Hydropower

India is also blessed with a network of small and large rivers and reservoirs that dot the nation, not just providing the masses with fresh water for their daily needs but also contributing massively towards the energy output of the nation.

Having a potential output of 148.7 GW across all the large hydroelectric projects puts India at the 5^th place globally, but less than a third of this potential is actually realised. India has 197 operational hydel projects (as of March 2022), generating a total of 46.85 GW of output.

However, the top seven projects generate a quarter of this total energy output, which begs the question whether optimisation is lacking for the rest of the projects in our country.

These seven projects amount to a total output of 11.71 GW, with 21 more upcoming medium and large projects in the next few years to add to the hydel output of the nation. Although hydel is one of the most exploitable sources of energy for our nation, there are quite a few problems associated with it-

1. Availability of water round the year is the major issue that occurs due to erratic rainfall pattern brought on by climatic shifts and changes.
2. Reservoir capacity required to set up large dams depends on available area for watersheds along with the head (vertical difference between inlet and outlet streams) of the dam. This is again hindered due to varying topography and lack of technological capabilities.

Hydrogen: The New One

Till now we have only taken a look at the well-known forms of alternative sources of energy. However, there could be a new sheriff in town. Hydrogen, or more specifically green hydrogen has emerged as one of the most exciting resources that could not just reduce the carbon emissions but could help the country in achieving net-zero emission goals by 2070. The National Green Hydrogen mission which was launched in January 2023 aims to act as a catalyst towards growth of alternative energy sector in India.

The reason that green hydrogen is called so is because it involves the electrolysis of water, which then splits into its component atoms i.e., 2H₂ and O₂ out of which Hydrogen is extracted. The energy required to undergo this is supplied using renewable energy, hence the prefix ‘green’. The greener the mix of renewable energy used, the ‘greener’ the Hydrogen will be.

Overview of Stock Market

Looking at the current growth and growth potential of green Hydrogen in the nation paints a positive picture for the future. Not only is it already being blended together with CNG and PNG (Piped Natural gas) networks in certain areas, the government also have an outlay of ₹19,744 set aside for green Hydrogen related projects.

Adoption of green hydrogen powered Fuel-cell electric vehicle (FCEV) buses has already started in some areas of Leh and Noida, which is a great promotional strategy employed by the NTPC.

Private and public sector players in the stock market are also seeing a noticeable upturn in their share values and an average expected RoI (CAGR) over the next 5 years (based on a few top companies) of around 9.85%.

Policy Suggestions:

The alternative and renewable sector of India is going to be of the utmost importance to ensure that carbon emissions are maintained in the suggested limits. It also ensures that the dependency of the nation on fossil fuels and hence foreign supply goes down. Based on the above analysis, here are some policy recommendations that the government should implement as soon as possible-

1. Dedicated programmes like the National Green Hydrogen mission for other alternative sources of energy should be formed and sustained.
2. Upgradation of the power grid is the need of the hour as without it the renewable energy sources will waste away.
3. Incentivised transition from traditional sources beginning with government transportation systems will set an example for the masses.
4. Infrastructure development and logistics deficiency needs to be addressed to remove redundancy and ensure smooth upgradation of existing machinery.
5. More amount of awareness programmes should be launched for ensuring installation of small solar panels on rooftops and such processes should be done.