India will have to face and address multiple challenges as it re-configures its energy mix in tune with the target of net zero emissions by 2070, says Yezdi Nagporewalla, CEO, KPMG in India. He believes the country is taking the right steps on multiple fronts in this context. India, for instance, will have the world’s third-largest installed battery storage capacity in place by 2030 to accommodate the rising share of variable renewable energy, he tells Arunima Bharadwaj.
How do you see growth of energy companies going forward?
Energy markets are indeed facing significant volatility. However, energy companies are expected to continue growing. Amid geopolitical friction, trade tensions and economic uncertainty, CEOs in the energy, natural resources and chemicals (ENRC) sectors are responding with confidence and optimism. About 78% of CEOs are confident in the global economy’s growth prospects over the next three years, as per KPMG 2024 ENRC CEO Outlook.
Other factors that could help in energy companies moving forward would be strategic agility, and technological innovation, sustainability and environmental and social governance. One of the key aspects that was highlighted in our study titled ‘ACED through AI’ reveals that AI can significantly speed up resource identification, land procurement, and interconnection management, reducing costs and uncertainties.
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The COP28 declaration aims to triple renewable energy capacity and double energy efficiency improvements by 2030, underscoring the importance of sustainability in future growth.
What is your outlook for Indian energy and power sector for the next decade?
The sector is poised for significant growth over the next decade, driven by rising energy demand and a strong push towards renewable energy. India is poised to face a higher increase in energy demand than any other country over the next decade mainly because of its size and the scale of rising demand from all sectors. This is according to the International Energy Agency (IEA ) which came out with its World Energy Outlook recently.
The total energy demand in India is set to increase by nearly 35% by 2035 in the Stated Policies Scenario (STEPS), and electricity generation capacity is set to triple to nearly 1,400 giga watt (GW). This growing demand is met through various energy sources, with coal set to remain the largest source of energy supply.
India continues to develop the requisite institutional framework needed to attract the investment required to satisfy this growing energy need.
Electricity security has improved through the creation of one national power system and major investments in clean energy. We are now seeing India working on integrating higher shares of variable renewable energy into the energy mix.
India has also been prioritizing access to electricity and clean cooking. About 700 million people gained access to electricity since 2000, and 80 million new LPG connections for clean cooking were created.
While renewable energy share grows, fossil fuels will still play a crucial role in meeting immediate energy needs, particularly in sectors where alternatives are not yet viable. In the three largest global energy consuming and greenhouse gas (GHG) emitting economies — China, the US and India — fossil fuels constitute over 80% of the primary energy consumption.
Beyond China, the US and India, a closer look at the data of the top 25 energy consuming countries is also revealing. As it demonstrates, several major energy economies have fallen behind in clean energy production, registering negative growth in CY20235.
India has a goal of achieving net zero emissions by 2070. In this scenario, clean power generation is nearly 20% higher than in the STEPS by 2035, and India will have the world’s third-largest installed battery storage capacity in place by 2030 to accommodate the rising share of variable renewables according to IEA.
As the country wishes to diversify its energy sources, what are the key challenges for its energy companies?
As India diversifies its energy sources, several challenges need to be addressed. There is a need to ensuring consistent and supportive policies to attract long-term investments in the energy sector. The COP28 declaration underscores the need for global co-operation to achieve clean energy goals.
Progress has been slow due to supply chain issues, grid limitations, and permitting complexities; though we believe AI can help alleviate some of these obstacles.
Despite renewable growth, reliance on fossil fuels remains high, emphasizing the need for effective solutions to accelerate the energy transition.
Securing adequate financing for large-scale renewable projects and infrastructure development is imperative. AI can help reduce risks and attract finance by improving predictability and reducing project development timelines. For instance, AI can optimize energy storage integration and grid management, ensuring that excess energy generated during peak production times is stored efficiently and used when needed.
Overcoming technical issues such as the intermittency of renewable energy sources and developing efficient energy storage solutions is the need of the hour. AI can facilitate the integration of renewable energy sources into the main transmission grid and distribution smart grids, making the energy distribution system more flexible and resilient.
Upskilling the workforce to handle new technologies and operational complexities is another challenge.
What are your expectations from upcoming COP29? What is India’s stance and the key agendas likely to be?
As we look forward to COP29, we are optimistic about the potential for meaningful dialogue and action on climate change. We anticipate a strong emphasis on climate finance, with an urgent need for fair and ambitious commitments that can address the unique challenges faced by developing countries like India.
India’s stance is clear: we are committed to engaging constructively in discussions that prioritize financial support for climate initiatives.
One of our key agendas will be to advocate for substantial climate finance that helps vulnerable nations effectively respond to the impacts of climate change. This includes addressing critical issues like loss and damage, which require adequate support to manage the consequences of climate events.
What are your projections on India’s geothermal capacity?
India, a rapidly developing nation, is on a path to energy independence. The pursuit of clean, reliable, and sustainable energy sources is very important. Among the various renewable energy options, geothermal energy stands out due to its immense potential and numerous benefits.
For India, a country with vast untapped geothermal potential, this energy source could be the key to achieving energy independence and a greener future.
From: financialexpress
Financial News
