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The Sun Also Rises (Delhi edition)

In India last week, the charismatic and controversial Narendra Modi, leader of the Bharatiya Janata (Indian People’s) Party, or BJP, scored a landslide victory in India’s parliamentary elections, ushering in a major leadership change for one of the world’s biggest countries.

Modi campaigned on the platform of returning India to aggressive year-on-year economic growth, a critical step to raising hundreds of millions from abject poverty.

One key aspect of Modi’s plan is India’s full electrification. The incoming BJP government wants to bring electricity to every Indian household by 2019, principally through the use of solar power, according to Narendra Taneja, one of the party’s energy advisers.

It is an ambitious goal befitting Modi’s idea that the twenty-first century “belongs” to India, but one that will require significant shifts in Indian policy.

Expanding Solar and Transitioning from Coal

In India, 400 million people lack access to electricity, mostly in rural areas, where the electrification rate is only around 60 percent.

By contrast, South Asia, China, and East Asia have electrification rates near 86 percent for their rural populations. As an additional challenge, much of the electricity currently generated—nearly 60 percent—is from coal, the world’s biggest climate change offender, according to figures from India’s Central Electricity Authority.

Renewable sources currently account for only around 12 percent of electricity generation. Thus, India will not only have to roll out a lot of new solar to bridge the 400 million gap, but Modi’s goal would also have to be much more aggressive to eventually replace its long-standing coal generation capacity with cleaner sources.

Unfortunately for those solar prospects, much of India’s installation is too focused on large-scale utility-sized plant projects, as opposed to distributed generation—think of solar panels on someone’s house—which would make more sense for India’s rural population.

Recently, India has succeeded in increasing its solar generation, mostly through then Jawaharlal Nehru National Solar Mission, convened by the outgoing Singh government, as well as various policies at the state level.

But, India’s policy framework falls far short of distributed generation’s potential. Of particular concern is India’s domestic content requirements (DCR), which mandate that much of the electricity generation capital stock be manufactured in India.

This prevents fuller cooperation with overseas firms and governments. (Indeed, the DCRs are the subject of competing World Trade Organization claims between India and the United States.)

Nuclear Power and Natural Gas

Of course, solar is not the only method for expanding clean generation. India wants to grow its nuclear industry, but has faced challenges in securing foreign investment, often blamed on its strict liability provisions. The governmental change in Delhi might occasion a re-think of that law’s strictures.

Additionally, Indian officials have been keen about serving as an export destination for American liquified natural gas (LNG). While natural gas is not carbon-free, it is a lot cleaner than coal.

Such a move would require closer economic relations between India and the United States. (Since no free trade agreement exists between the two countries, American companies need permission from the U.S. government to export natural gas).

The partnership has suffered in recent years, after the high point of the civilian nuclear agreement of 2005. It is not inconceivable that a renewed focus on the relationship would include extended discussions on energy cooperations.

Whatever method is pursued, what Modi envisions is nothing less than an astounding advance for the standard of living for the average Indian. For strategic reasons, the United States should be invested in ensuring the success of that project.

Tags: modi, indian elections, india, energy, electricity, delhi, coal
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