India, which spent 1.7 billion rupees a day ($37 million) subsidizing fuels in 2010, could replace power produced from diesel with renewable sources at one-third the cost of generation, the World Bank said.
The country’s entire wind, biomass and small hydropower potential of 68,000 megawatts could be produced at 6 rupees a kilowatt-hour compared with the 18 rupees a kilowatt-hour cost of diesel generation, according to a World Bank report.
The government subsidizes several fuels including cooking gas. Diesel fuel’s subsidized cost has led to it being used across India by companies and households for a back-up generators for 20,000 megawatts of electricity a year amid a chronic power shortage in Asia’s third-biggest economy.
“Reallocating the money that would have been spent buying short-term power to investment in renewable energy can yield significant savings,” the World Bank said in the study published Feb. 11.
India spent an estimated 470 billion rupees for the nine months ended Dec. 31 subsidizing fuels, Oil Minister Jaipal Reddy said Jan 31. That calculates to 1.7 billion rupees a day.
Better energy security
Switching to renewable sources would also ensure better energy security, the World Bank said.
Renewable-energy projects provide a “hedging mechanism against price volatility of fossil fuels” because plants aren’t vulnerable to the escalating fuel costs that conventional coal, oil or gas utilities face, the report said.
The costs of renewable energy, adjusted to account for that lower risk, are less than those for power produced from fossil fuels, it said.
Small hydropower is largely untapped and is the most economically viable at 3.56 rupees a kilowatt-hour, followed by biomass-based generation at 4.6 rupees a kilowatt-hour and wind- based generation at 4.9 rupees a kilowatt-hour, it said.
India, the world’s fifth-largest producer of clean energy, has 62,000 megawatts of renewable potential that could be economically feasible “when the environmental premiums on coal are brought into consideration,” it said.
