Back to ResearchThere is a curious dichotomy in the Narendra Modi regime’s energy policy. The government keeps rolling out policy after policy about how to get India’s buried coal reserves out of the ground and into the furnace. Yet, Modi’s conversations about energy give a special place to solar power and his own interest in climate change.
There seems a slight disconnect here.
One presumes that the coal burning is about a short-term need to revive the moribund power generation sector. The energy landscape is littered with idle power stations, left derelict by a lack of coal priced at a level that would allow them to sell their power for a profit in India.
Many of these power projects await green clearances that would allow the coal to come out of the ground, some await rail links to move coal and others just want a higher power price to cover the costs of the coal they are importing.
But this means India will be adding a lot dirty carbon to its air in the coming years. However, given the fact that these dead weight power stations are a key reason for the bad loans threatening India’s banking sector and the blackouts that are crippling its manufacturing and agriculture, Modi is absolutely right to concentrate on bringing them on steam — and damn the emissions.
However, his love for solar, he dubs it is his “saffron revolution” just to get the goat of earnest secularists, tells us where his heart really is.
Solar, I sense, is where he combines his climate change instincts, a desire to win the votes of the 400 million Indians who are not connected to a power grid but who could benefit from a solar panel on their roofs, and a belief that India could become a major hub for the tech behind it all.
And his solar campaigns in Gujarat were successful, though his on grid solar push was not quite as cost effective as it should have been. But solar prices are still falling.
Yet rolling out solar is expensive, very expensive and the government of India has nothing in its coffers except IOUs to others. So solar will be medium term goal that will only really start to roll out once the Indian govenrment’s finances start to correct themselves.
What Modi doesn’t talk too much about is oil and gas. The former is a pretty efficient market anyway. But natural gas requires policies that nurture the building of huge infrastructure. Gas is also the most green of the fossil fuels so it would be a perfect replacement for coal — except that it costs a whole lot more. Finally, in India, gas is inextricably tied up with the government to Reliance Corporation relationship.
So far, then, this seems to be a government for sun and soil, the latter for the immediate needs of an ailing economy and the former for the future.
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