CleanTech/ Renewable Energy, Other

The green entrepreneurs

According to reports, there have been many signs that green entrepreneurship is coming of age in India. A report published in this newspaper on Thursday says that several renewable energy firms are now trying to raise capital by listing on the Singapore Stock Exchange.

Not all the new companies in renewable energy will succeed, as is inevitable when there is innovation at the global technology frontier. But the winners could get asymmetrical success, similar to what we saw in the early years of the information technology revolution. Renewable energy is a bit of a level playing field right now, with no dominant players.

There are two reasons why the journey of such companies needs to be watched closely. First, the dependence on energy imports is expected to keep growing even as countries such as the US move towards energy independence thanks to the discoveries of shale gas in its territory. Growing energy imports will not only put pressure on the trade balance but also make India hostage to developments in volatile West Asia.

Second, climate change worries mean that the growing usage of coal will impose hidden costs on the Indian economy. The National Action Plan on Climate Change recommends that India generates 10% of its total power production from renewable sources such as solar, wind and hydropower; this proportion is to go up to 15% by 2020.

Traditional sources of energy such as petroleum and coal will continue to power India for many years to come. It is too early to expect a tectonic shift in the pattern of energy use. The latest edition of the BP Energy Outlook 2030, which was released in January, predicts that the two sources of energy that will grow rapidly are natural gas and renewables. Their share of global primary energy consumption will climb, while that of oil will plummet.

The renewables game is still at a nascent stage. Capital costs are high, there is a great degree of technological uncertainty, and renewable energy is still expensive (though the cost per unit of, for example, solar energy is dropping quickly).

It is against this backdrop—with issues ranging from trade balances to strategic calculations to climate change—that the growth of green entrepreneurship in India must be welcomed.



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