Upcoming Solar Race - Key to become A Next-Gen Superpower
Updated: Oct 31, 2022
Image Credits: The Economist
Energy is the foundation of human civilization and has led the world into the phase of industrialization and eventually into a globalised world. Looking back to history, crude oil was one commodity that entirely shaped the 20th century.
It led nations to wars, violence and the rise of what we call resource geopolitics. It is the politics revolving around the crucial natural resources among the countries. However, with rapid innovation in sustainable technologies, new sectors of energy generation are emerging in the 21st century intending to reduce our dependence on fossil fuels and maintain the parity between climate change and our needs. In the last decade, among all viable renewable energy sources, solar energy became the cheapest source of energy humankind has ever found on the earth and now it has the potential to altogether transform the dynamics of geopolitics.
Image Credits: Polytechnique
WHY SUDDEN SURGE?
The world, much of its modern existence, depended upon oil and coal for energy production and economic growth. However, with the advent of new technologies, the extraction cost declined and energy efficiency improved, leading to more profits and higher dependence on fossil fuels, causing adverse effects on the climate. However, with the rise of the Climate agenda, countries started to look for a source of energy that is sustainable and affordable as well. In this quest, solar energy became the shining light for corporations and nations.
In 2010, Solar energy was the most expensive energy, with utility-scale solar photovoltaics costing $359 megawatt per hour. However, by 2019, it reduced to $40 megawatt per hour, becoming the cheapest energy fuel in world history. It gave an enormous opportunity and reason for companies to tap into the solar energy market, leading to a massive surge in the number of players in the sector since 2010. As solar energy is relatively new, countries still heavily rely on fossil fuels for much of their energy needs. For instance, in 2019-2020, coal and crude oil dominated India’s energy needs with 76.61 % of total energy consumption and only 14 % from renewable sources. The same trend is with other major countries in the world, with the USA having only 12 % and China having an 11% share of renewable energy consumption. However, with changing trends, two countries are moving rapidly to transform the energy sector entirely by building robust supply chains and increasing investments- China and India.
THE INDIA WAY
Primarily focussing on India, with the launch of the “One Sun One World One Grid” agenda, it took a monumental step in the Solar Energy sector by building alliances. It aims to build a network of nations to share renewable energy with transnational grids spread across continents. As propounded by PM Modi in October 2018, it is an initiative where India can rapidly move ahead to create an alliance of nations that can easily share solar energy with each other with the help of international and intercontinental grids. It is also important because India, being a developing nation, needs the support of other like-minded countries to become a centre of solar energy generation through collaboration and cooperation, thus helping her to foster strategic alliances to tackle its adversaries in the long run.
The government, in order to promote the Solar Energy sector domestically, is constantly bringing schemes to support new and innovative technologies where companies can come forward to invest in the future. For instance, Borosil Renewables is India’s only solar glass manufacturing corporation and is constantly working on improving the technology.. Furthermore, India is promoting the building of robust supply chains to connect every other nation with its proposed solar grid in the world. With countries aiming to move away from China and reduce their dependability, India has a great opportunity to fill in the gap and become the harbinger of a new generation of Resource Geopolitics, which would not only be dominated by renewable energy but also innovative technology and supply chains to harness the energy. With this in mind, India in its budget allocated Rs 3,365 for the solar power sector, for both grid-interactive and off-grid projects, which is 29% per cent more than the previous year's allocation.
Moreover, India allocated 4500 crores in its Production Linked Incentive (PLI) scheme to add 10,000 MW manufacturing capacity of integrated solar PV modules with a direct investment of 17,200 crores. The scheme attracted new players such as Adani Green and Tata Power to invest in this sector and make India one of the energy superpowers of the 21st century.
Image Credits: PM India
However, for India to become the energy superpower, it has to face multiple challenges from the top Solar Energy producing country, China. As of 2020, China produces 90% of all the basic components needed for solar panels. For instance, 64% of Polysilicon materials, which are used to make solar ingots and wafers, are only produced by China all across the world, giving it a tremendous boost over any other nation. Further, in terms of technology, China has 39,784 patents as compared to India, which has only 248 patents.
With already developed manufacturing cities and highly efficient logistics and supply chains, China is way ahead of other nations with a monopoly in the Solar energy sector. Given such a tremendous monopoly, it has already started waging a price war with the increase in the prices of solar components. For instance, the cost of solar modules reached 29 cents in October 2021 from 18 cents per watt in September 2020. Similarly, the Cost of polysilicon materials rose to 343% in 2020, causing a 33% rise in the prices of solar modules. Moreover, India still relies upon China for 80% of its renewable energy industry needs, which further boosts up to 95% if we include China’s overseas operations. This high dependency has the potential to hike the prices of the components, which has already happened.
However, India has the potential to reduce its import dependency on China and produce indigenous high-quality solar components at cheaper prices through intense innovation by the corporations with the handhold support of the Government through favourable policies and investment. Moreover, given that many countries are wary of China’s dominance and high-handedness in world politics, India has the perfect opportunity to invite investments and build its customers all across the world. In this regard, India, in order to discourage imports of solar components, has decreased its dependence on China by reducing imports from $3.42 billion in 2018 to $1.2 billion in 2020.
WAY TO BECOME THE NEXT ENERGY SUPERPOWER
Solar energy is going to transform the 21st century, leading to a new phase of Resource Geopolitics where renewable energy will replace oil as its centre. With the support of the Government and the capability of domestic companies, India can strategically move ahead to become a NextGen energy superpower and reduce its dependence on China for raw materials. India has already tapped into the prospects of building alliances to tackle the behemoth like China, thus giving it extra prowess to create supply chains and long-term partnerships. Therefore, as the world is moving towards balancing the average global temperature, India is working on new ways to produce energy that is cheap and sustainable.
BY NAYAN CHANDRA MISHRA