A good climate year

From record low tariff for solar power in India to Joe Biden making climate change his core agenda, 2021 will mark events that will prove to be a good year for the climate

A few entries in the energy and climate calendar for 2021 give reason for optimism this year, even though the shadow of Covid-19 continues to loom. For a start, in about two weeks from now, there will be a large, new aggressive player on the climate change stage.

US and climate pact

US President-elect Joe Biden has climate change and clean energy at the core of his agenda. In a tweet last month, he said: “On day one, my administration will rejoin the Paris Agreement and put America back in the business of leading the world on climate change.”

He said his green team would be “ready on day one to confront the existential threat of climate change with a unified national response rooted in science and equity. They share my belief that we have no time to waste to confront the climate crisis, protect our air and drinking water, and deliver justice to communities that have long shouldered the burdens of environmental harms.” Biden is to be sworn in as the 46th President of the US on January 20.

Meanwhile, the recently approved stimulus bill contains multiple measures for the renewables sector in the US, including tax credits for offshore wind, grants for charging infrastructure for electric vehicles and funding for research and development.

Tesla enters India

Indians should finally be able to buy a Tesla car locally this year. A lot of details are yet to follow on the promised “early 2021” launch.

Local assembly or manufacturing — which could make the car much more affordable — will be decided subsequently. Tesla is currently building two new vehicle assembly operations, in Berlin, Germany, and in Austin, Texas, to add to the existing facilities at California and Shanghai.

The company delivered about 500,000 electric cars in 2020, some 36 per cent higher than its 367,500 units in 2019. BloombergNEF has estimated that electric passenger cars sold by all manufacturers globally over 2020 totalled more than 2.7 million.

Solar at Rs 1.99 

A new record low tariff was set for solar in India last month at an auction in Gujarat. The reasons for falling tariffs are familiar: Intense competition, expectations of further declines in solar panel prices and availability of cheap capital.

The widespread availability of competitively-priced power can be a boon for industrial and commercial establishments that help cross-subsidise residential and agricultural consumers. To make possible cheaper power for all, a proposed restructuring of the power sector may finally go through this year.

It is quite likely that new tariff records will be set through 2021, further tilting new-build towards solar. The cost of power from new solar plants could soon swing lower than the fixed cost paid to thermal plants.

Coal India and solar

Coal India — the world’s largest miner of coal — announced last month that it will branch out into solar manufacturing (including ingots, wafers, cells and modules), solar generation and aluminum mining, refining and smelting.

The announcement to diversify into new growth sectors was widely seen as an acknowledgement of the changing fortunes of its core business. Other state-owned companies, such as NLC India (formerly Neyveli Lignite) and hydro company SJVN, are also expanding their footprint in the renewables space.

24x7 electricity and rooftop solar rights

Having uninterrupted, reliable supply of power and being compensated for disruptions will be a right offered to all Indians soon. Consumers will also have the right to “set up renewable energy generation units, including rooftop solar photovoltaic systems —either themselves or through a service provider.” Net metering is to be provided for loads of up to 10 kilowatts, and gross metering for higher loads.

The central government laid down rules for service quality last month, and these will have to be followed by all the states early this year. Sudden disruption to power supply remains common even in urban areas, and has created a booming market for backup power from diesel-fired generators or via lead-acid batteries.

Concerns nevertheless remain on what will be achieved practically on the ground given the scant regard that some power distribution companies appear to have for the customer, and the fact that many of them are financially stressed.

Glow in Glasgow

Towards the end of the year, the COP-26 international climate conference will take place in Glasgow, Scotland. It will “bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.”

There is an expectation that countries will be willing to bring bigger promises to the table. Many of them are choosing to stimulate their economies through green measures in energy, mobility as well as in heating and cooling. Meanwhile, the economics are making low-carbon transitions inevitable.

The writer is editor – global policy for BloombergNEF.  vgombar@bloomberg.net