How to Bridge the Energy Gap

India has a unique opportunity to bridge its energy gap with renewable sources.

India is on the road to development. Urban populations are growing exponentially, rural villages are being electrified and the emerging middle-class is flaunting its newfound wealth. But this growth begets challenges.

One of the pressing challenges will be providing energy to all that requires it. McKinsey estimates that by 2017, India’s energy demand could be as high as 335 gigawatts (GW)—up from just 120 GW in 2008. In order to meet this demand, India will have to triple its current capacity. Not an easy task.

However, this seemingly difficult challenge also presents a great opportunity. Like other developing countries, India has the option of meeting its growing energy demand by employing clean energy solutions. In a way, starting off right is easier than trying to implement new technologies after the fact. This is the dilemma facing many developed countries—the United States, Japan and Germany.

If India harnesses its enormous clean energy potential, it can become a leader in the renewable energy race. The Creating a Clean Energy Century report by progressive think tank The Third Way estimates the global energy market at US$6 trillion. While the majority of energy is still produced by fossil fuels and other finite resources, the share of clean energy is set to grow.

Global investment in clean energy is on the rise. Bloomberg New Energy Finance reported that the investment in 2010 was at US$243bn—up from US$186.5bn in 2009. The Third Way report also ranked countries based on clean energy investment as a percentage of GDP. Spain led the pack at 71%, closely followed by China at 70%. India reported investment at 19% and the U.S. at 13%.

While India is on the right track, the country has only begun to take advantage of its renewable energy potential. According to McKinsey, India only utilized 4% of its potential in 2008. Within that fraction, wind energy produced 8.7 GW, small hydro 12.4 GW, biomass 2.1 and solar 1.2.

The Way the Wind Blows

While India has one of the highest solar intensities in the world, the high capital required has hindered solar power in India. While McKinsey estimates the potential at 200 GW or more, the technology will have to become more affordable for India to take advantage.

Wind, on the other hand, is one of the easiest applications of clean energy to implement. Because of government tariffs and policies, wind is also one of the most attractive options in India. McKinsey estimates a potential of 65 GW, but the World Institute for Sustainable Energy, India, estimates that it could be as high as 100 GW.

Currently, India is the fifth largest producer of wind power after the U.S., Germany, Spain and China. India produces 11807 MW in 2009—more than 40% produced in Tamil Nadu.

Although wind energy has yet to penetrate the Indian market like other countries, a few multinational companies have staked claims on the Indian breezes. One such company,Acciona Energy, recently completed financing for its third wind farm in India. The plant, located in Karnataka, will have an operating capacity of 56 MW and double the company’s capacity in India.

“India is one of the strategic growth countries for ACCIONA Energy,” said Glen Reccani, Managing Director of ACCIONA Energy India Pvt. Ltd. “Its stable regulatory climate is very conducive to investments in renewable energy.”

Putting the Pieces Together

Another way Indian companies are attempting to bridge the power gap is to operate across clean energy applications, to create a diversified portfolio.

Orient Green, a top wind producer in India, is active in wind, small hydro and biomass. The company has a significant wind power portfolio—measuring an operating capacity of 134.6 as of early 2010. The company has another 623.5 MW in committed projects and projects under development.

In order to strike a balance, the company is also creating a small hydro plant in Orissa with an estimated capacity of 15 MW. In the biomass space, it currently operates six plants with a capacity of 40.5 MW and has 18 more projects currently committed and under development.

Greenko is another company aiming to diversify its clean energy portfolio. Currently, the majority of its holdings are in the biomass and hydro areas, but it will soon venture into the wind area. The company has a 104.25 GW capacity in its hydro operational projects and another 304.35 in licensed projects. In biomass, it has a current operating capacity of 41.15 with another 47 in licensed projects.

Greenko has partnered with GE to start a wind project that will eventually have a 200 MW capacity—the first 65 MW to be in Maharastra. The project with implement GE’s XLE series wind turbines that are especially suited for low-velocity wind like in India.

Embrace the Challenge

India has tremendous renewable energy potential and the demand to take advantage of that potential. If India can harness this possibility, the country’s inevitable energy gap can be met using renewable sources.

How India embraces this challenge will impact the outcome. The Global Wind Energy Council (GWEC) estimates that if India continues on a conservative path, the wind energy capacity could be 24 GW by 2020 and 30.5 GW by 2030. If all planned policies are implemented and all current targets met, India’s wind energy capacity could be as high as 40 GW in 2020 and 108 GW in 2030. If, however, India absolutely commits itself to renewable energy, the GWEC estimates that the wind energy capacity could be 65 GW in 2020 and 160.7 GW by 2030.

In order to be a leader in the renewable energy race, India needs to jump headfirst into the challenge.

This story originally appeared here.